Young Drivers Should Buy Used Cars

on Sep 06 in Who Should Buy Used? tagged deciding what to buy, Used Cars, young drivers by jasonl

If you are a young driver (under 25), or if you are buying a car for a young driver, you should definitely consider a used car. Often times young drivers end up with a new car because there are a lot of positives for young owners — new cars are safe, reliable, and usually offer some sort of first-time-buyer financing or rebates. New cars also tend to get young buyers really excited. However, before you go to the local dealership and buy a brand new vehicle, consider the following:

1. Younger drivers are most likely to trade-in their new car too soon. Young people — don’t take this the wrong way. We’re not saying that you’re irresponsible because you want to trade-in your car every year. What we’re saying is that younger drivers, as a whole, have the most life-changes of any buying group. Think about it — odds are very good that a person 25 or younger will do one of the following:

1. Move out of state (for a job and/or college).
2. Get married. We know, we know, it’s not in your plans, but look at the statistics. It’s a very real possibility.
3. Move back in with their parents. Will your new car keep you from being able to pay rent?
4. Have kids. Sure, you’re not planning on it, but how many people do plan on it?
5. Join the military, peace corp, job corp, etc.

The fact is that the best part of being young is that you don’t have to make any commitments or any long-term plans. You can be in college one day, and living in downtown Boston the next. Single today, married with a child this same time next year. Living in a big city now, living in a small town tomorrow. You get the idea.

Because young people’s lives change so much so quickly, it’s almost impossible to buy the right car. The new 4-door economy car you buy today sounds great, but what if in two years you need a 4×4 to get to work? That new coupe seems like the perfect car, but what if you have a family? In fact, you could buy a car and then get offered a job in a big city where you don’t need a car. Because things can change so much, the best bet is to buy something cheap and reliable until such time that you know what’s going to happen for the next few years.

2. Young drivers tend to be hard on new cars. OK – this point is a little personal. Hopefully, we haven’t offended anyone. It’s just that, in our years of experience in the car business, a car owned by a young person usually has more wear and tear than a car owned by just about anyone else. Maybe it’s all the partying, all the hauling your friends around, or maybe it’s just that you’re too busy to worry about anything else. We know it’s not a reflection on your character, just a circumstance of your situation. But no matter why it happens, the fact is new cars with excessive wear and tear are very hard to trade-in. Buying a new car and tearing it up can result in you having to keep that car until it’s paid off — for a lot of young people, that might as well be forever. With a used car, you can’t hurt the value as much if you tear it up. It was cheaper to begin with.

For parents buying cars, here’s another thought to consider: If you buy your young driver a new car, what life lesson are you teaching them? Better to buy them a safe, reliable, and cheap used car than a nice new car. That way they’ll learn they have to earn the best things in life just like you did. At least that’s our opinion.

3. Young drivers should buy used to save money. People under 25 already have enough to worry about — why should they saddle themselves with a big car payment? School, high auto insurance costs, and a healthy social life all cost money. Since most young people have to start out in an entry level job, should they really commit themselves to a big new car payment? After all, no one wants to see them move back in with their parents…

We hope that our frank advice here wasn’t offensive to anyone under 25, but we want to make it clear how many young people we’ve seen struggle with car expenses. While it’s extremely tempting to buy a nice new car when you’re a young person, we’ve seen it backfire more than half the time. I can’t tell you how many times I sold a new car to a young person, after suggesting they consider a less expensive used car, only to see them return a year or two later and try to trade that same car in. Had they bought the less expensive used, trading would have been much simpler. In fact, had they bought a less expensive car in the first place, they probably wouldn’t need to trade at all.

Questions You Should Ask Yourself Before Buying Used

on Sep 04 in Who Should Buy Used? tagged deciding what to buy, Used Cars by jasonl

When considering a used car, you should ask yourself some questions:

1. How long are you going to keep it?

If you want to keep a car for more than 5 years, buying used isn’t always a good deal. Depending upon the mileage and age of a used car, it can sometimes be a really bad idea to buy used if you’re planning on keeping it for a long time. For instance, if you drive 15k miles a year and you buy a car with 75k miles on it, you’re not going to get more than 2 or 3 years out of it before you start spending major money on repairs and maintenance. While you might have saved big bucks because you bought used, if you end up spending thousands of dollars on repairs two or three years down the road, did you really save? The point is, buying new is more expensive but it is worth it in some cases. But before you decide, ask yourself…

2. OK — How long do you think you’ll really keep this car?

Most people buying a car will say that they’re going to keep it for at least the next five years, but the average term of ownership is only 39 months (about 3 years). The truth is that most of us overestimate how long we’re going to keep a car. And there’s a good reason for this — as our lives change, so do our cars. Three years from now you could have a new job, a new house, a new pet, a new hobby, a new baby, etc., any of which would require you to change vehicles. Also, ask yourself how long you’ve kept cars before. If you’ve never had a car for more than 3 years before in your life, why would that change?

3. If you’re not going to have it for very long, why buy a new car?

The biggest advantage of buying a new car (aside from that wonderful smell) is that you know it will last a very long time. You can make sure it’s properly maintained, you know it’s strengths, personality, etc. But if you’re only going to have a car for two or three years, all the advantages of having a new car go away. They’re expensive, they depreciate, and they’re hard to trade-in until they’re almost paid off. For all these reasons, if you’re only going to keep a car for 2 or 3 years, buying used makes a lot of sense. Used cars are less expensive, they don’t depreciate as much, and if you get one in good shape with a warranty you shouldn’t have any repairs or expenses.

4. What’s your financial situation?

Do you have any outstanding credit-card debt? What about 2nd mortgages, home equity loans, or student loans? If you can answer “yes” to any of those, you might want to think about going with a used car. Getting an inexpensive used car can help you pay off your other debts early. Once all that other debt is gone, feel free to treat yourself to a nice new car.

One last question — Are you picky? I mean, really really picky? If you are (and that’s OK as far as I’m concerned), you should buy new. Used cars always have scratches, dents, rattles, squeaks, stains, etc. None of that stuff should be too bad, but ultimately a “used” car is, in fact, used. Make sure you’re OK with this fact before you buy one and you’re sure to be happy.

Everyone Should Consider Buying a Used Car

on Sep 04 in Who Should Buy Used? tagged deciding what to buy, Used Cars by jasonl

If you’re in the market to buy a car, there’s a good chance buying used can save you money. While there are a lot of factors to consider when deciding to buy a new or used car, here’s a few reasons to think about going used:

1) Used cars don’t depreciate as much as new cars.

Everyone knows that new cars depreciate thousands of dollars when you drive them off the lot. Used cars also depreciate, but usually they do so much more slowly and in much smaller amounts.

2) Used cars are often half the cost of new cars.

Most new cars lose 25% of their value the first day of ownership, and 40-50% within 2 years of being purchased. In other words, a 2 year old used car/truck/SUV is HALF the cost of a brand new one. Usually, these 2 year old vehicles are still under warranty and they have relatively low miles.

3) You can often afford a nicer used car than you could buy new.

If your budget doesn’t allow you to buy the new car of your dreams, switching to a used vehicle allows you to get more features and luxury (often for a lower price).

4) Used cars can be purchased with warranties similar to new cars.

If you’re biggest concern is buying a reliable car, remember that you can often buy a warranty on a used car that will meet or exceed the standard new car warranty.

5) Used cars give you more options in the future.

Often times, when you buy a new car you find yourself locked into a vehicle for a few years. Perhaps it’s just a three year lease, or maybe you decided to take the 0% financing for the next 6 years. In either case, it’s difficult or impossible to trade the vehicle in until your financing or lease is over. With a used car, it is much easier to trade-in and change vehicles.

Whatever you decide, make sure you always follow our basic advice. Do your research, get quotes online, and take your time.