Benefits of Buying Pre-Owned

Other than your home, your car might be the most expensive purchase that you ever make. Because of this, there are several good reasons to consider buying a used car, including ample selection and the improving reliability of older cars. But the main attraction for used-car buyers is still affordability.

Price

Buying a new car is definitely more expensive than buying a used one. In fact, the price spread between new and used is widening. The latest figures available from CNW Marketing Research indicate that the average transaction price, before taxes and fees, on a new car in 2011 was $29,916. The average used car transaction was $9,297 during that same time period. This spread has increased nearly 20 percent since 2008. Unless you decide to lease, your initial costs on a new car will be hefty. Financial institutions typically require down payments of about 10 percent on a new-car loan, but it helps to add more. If you pay less money up-front, your monthly payment will be higher.

Two other key considerations may tip the balance in favor of used cars: certification programs and new-car depreciation.

Certification Programs

Another trend that makes buying used a better option is the proliferation of certified pre-owned programs. The idea started with luxury brands such as Lexus and Mercedes-Benz. Today, most manufacturers have instituted these programs.

General benefits of Certified Pre-Owned (CPO) cars include:

• Manufacturers usually consider only late-model, relatively low-mileage used cars and trucks with no history of major damage for their certification programs.
• CPO vehicles undergo a rigid inspection process of mechanical and cosmetic items before they obtain certification.
• CPO vehicles are normally covered by a warranty that extends beyond the original factory warranty. The warranty often includes the same features as a new-vehicle warranty, such as roadside assistance.
• Several manufacturers offer special financing on CPO vehicles, usually at lower rates than those on new-car loans or the typical, higher used-car loan rates.

Buyers should be aware that they pay more for a CPO car than for a regular used car, but the higher price may be worth it for the extra coverage and the peace of mind they receive.

Avoiding Depreciation

Once you drive your new car off the dealership lot, its value will drop immediately in your early years of ownership. On mainstream vehicles, expect your new car to lose at least 30 percent of its value in the first two years of ownership.

Falling Registration Fees
In most states, the rate of your annual registration fee is based on your car’s value and its model year. In Colorado, for example, registration fees fall dramatically during the first few years after a car is manufactured. The rate is highest in the first three years, and then levels off after five years. If your state has similar rules, you can save about a thousand dollars by avoiding the new car registration fees and buying a car that’s at least three, or better yet five, years old

Useless Extras on New Cars, Cheaper Features on Used Cars

The oldest trick in the dealer’s book is to install additional dealer options. They’ll add a pinstripe, a protective film, or the immortal “anti-rust coating,” but new car buyers who want these add-ons can easily get them for a much lower cost from an after-market installer. Regardless, these changes don’t add a dime to the car’s resale value anyway. When you buy used, you may not get every feature you want, but you certainly won’t end up paying extra for things you didn’t ask for.

On the other hand, when you search for specific features that you do want in a used car, like a sunroof or navigation system, you’ll pay far less than the original owner did. Instead of needing to decline a dealer’s expensive navigation package with fees and surcharges, you’ll be able to afford the built-in features.

Condition

Nowadays, cars are built to last for at least 100,000 miles, so you don’t have to sacrifice reliability and overall condition just to get a good deal on a used car. You can get a used (or “pre-owned”) car that’s scratch-free and in excellent mechanical shape. In fact, if you know anything about cars, you should be able to find one that is in “like new” condition.

However, if you’re not comfortable under the hood, you can rely on the certification programs and extended long-term warranties that most car makers offer. When you buy a used car at a manufacturer dealer, you’ll know that they’ve inspected the vehicle and that it meets the strict requirements for certification. The biggest benefit you might find is the manufacturer’s warranty for used cars. Toyota, for example, offers a seven-year 100,000-mile warranty on certified used vehicles. This kind of peace of mind is crucial when buying a used car.

Consult used-car value guides to get an idea of what a particular model will be worth in the future. Leasing guides are another good source, even if you intend to buy instead. Lease payments are calculated based on residual, or resale, values. The Automotive Lease Guide projects those values for leasing companies to use when setting their prices.  

So, in conclusion, if you are in the market for a good pre-owned vehicle, look no further!  Call us today at Welborne Motor Company for the best selection of pre-owned cars, trucks, SUV's, and vans in the Statesville area!

Sources:  www.cars.com, www.moneycrashers.com