Use Car

The Benefits and Drawbacks of Buying a Used Car

By Derek Hudson

More used cars are bought and sold every year in the U.S. than new cars. The market is huge and the savings, compared to purchasing a factory-new vehicle, are enormous. However, there are some downfalls to used car purchasing too. To learn about some of the benefits and drawbacks of buying a used car, keep reading.

1. Benefits

Savings

A new car goes through its greatest depreciation period during the first few years of ownership. This means a potential buyer stands to save a lot of money by waiting to purchase an off-lease or used vehicle that's just a few years old.

Not only will you save initially, but you will also on your financing costs. Because the car costs less, your loan term will be shorter, meaning you can save on interest costs by paying off that car more quickly.

Lower Insurance
Insurance rates on older or used cars are often much lower than with brand new vehicles. Because the overall value of the vehicle is lower along with the risk of theft, that savings is normally passed on to you.


2. Drawbacks

Limited Options
If you absolutely must have a cherry-red Volvo wagon with racing stripes painted down the side and leather interior, your options might be more limited in the used car market.


The Blind Date Factor
Because the only thing you know about a car's history comes from its previous owners or dealer and your CARFAX vehicle report, you're somewhat in the dark about the vehicle's past.

While most major accidents or incidents like flood damage will show up on a vehicle history report, it's important to look for a vehicle that's solid and reliable.

Before you buy any used car without a warranty, always have it point inspected by a third party, certified mechanic. Their professional and independent opinion could mean the difference between scoring a great deal and getting stuck with a lemon.


Lesser Warranty
While some dealerships offer used cars that come with a limited manufacturer's warranty, you won't find that option with private sales. On the other hand, most new cars come with lengthy factory warranties that extend for several years or thousands of miles.


Higher Interest RatesBecause they want to lure customers, many new car manufacturers offer fantastic financing rates that are as low as zero percent. When you're buying a used car, you have less financing options and either has to go with the rate either your bank or the dealership offers you.