The allure of driving off the lot with a brand new car is compelling. In fact, demand for new cars led to record sales in the U.S. in 2016 and 2017, with more than 17 million sold during each of those years.
But if your budget is tight, a new car may not be the best investment. Because of demand, the average price of a new vehicle is roughly $36,000. And as soon as you make the purchase, you’re dealing with depreciation. After three years of ownership, your car might only worth about half of what you paid for it.
Consumer Reports says two- and three-year-old vehicles offer the best value. So, if you’re in the market, now is a great time to buy if you’re open to lightly used cars.
The used car market
There are just as many options, if not more, when it comes to used vehicles.
Nearly a third of all auto sales in the U.S. are leases, resulting in an increased supply of low cost, quality used vehicles in the market as lease terms come to an end. Many franchise dealers are sweetening the pot by offering certified pre-owned vehicles which often come with free maintenance, a loaner vehicle and roadside assistance. Most of the vehicles manufactured in the last few years – even larger trucks and SUVs – are more fuel efficient than in previous years, making consumers less vulnerable to rising gas prices.
Not to mention, a two- to three-year old car likely has technology features and the bell and whistles that have become standard these days. The same goes for safety features, too.
Before you buy
Buying used means doing some homework before making your purchase. After all, the vehicle has ownership history and you should know the details if it’s soon to be yours.
You should first check pricing books, like Kelley Blue Book®, to compare prices of your desired car and get a fair price estimate.
Once you’ve narrowed down a few options, check out vehicle history reports to make sure your choice is a good one. Websites like CARFAX® or the National Motor Vehicle Title Information System are great places to start. The vehicle’s history can affect the price, and it’s helpful to know for your own peace of mind.
Before you go to the dealer or seller, also keep in mind how you’ll finance your purchase. If you know what your desired car is worth, talk to your financial institution about getting pre-approved for financing. That way, you can shop as a cash buyer and avoid spending more than you can afford.
Drive with confidence
It feels good to get behind the wheel of a car you picked out. Make that feeling last longer knowing you made smart choices with your vehicle selection. By following these pointers, you may even drive off with a great deal!
Now that you’re an owner of a car that’s new to you, read this checklist for new car owners. That way, you can enjoy your car for years to come.