■ RICHARD PERRY / Contributed
Greetings from the Hemet Car Guy,
Buying a new car is exciting with all the features and that new car smell! However, you might regret it when that new car smell goes away.
You can save a lot of money by buying used cars instead. Besides, they sell the new car smell in a can.
The average person will own 13 cars in a lifetime, each costing an average of $30,000, according to a report by the National Automobile Dealers Association. If each of those cars was three years old, instead of new, you could save nearly $130,000 during your lifetime.
Depreciation saves you money!
Once you fully understand how car depreciation takes money out of your wallet, you’ll learn how to save a lot of cash and regret over your lifetime. You often hear that a car loses 20 percent of its value as soon as you drive it off the lot. Yes, in just one minute, especially in a new car that cost $30,000 will lose $6,000 as you drive down the road. Not to mention by the end of the first year, mileage and wear and tear could bring that to 30 percent, or $9,000. Why don’t you feel this big hit? Because it takes effect much later, when you sell or trade in your car.
Run the numbers
New-car depreciation: You buy the car for $30,000 and sell it three years later for $15,000. The car has cost you $15,000 in depreciation.
Used-car depreciation: Now let’s say you buy the same car, but it’s three years old when you buy it. You could buy the car for $15,000. Three years later you could sell it for $10,000. So the used car depreciation cost you only $5,000.
If driving a new car is worth an extra $10,000 to you, then go ahead and buy one.
Some people say they don’t buy used cars because it’s just buying someone else’s problems. That’s not true anymore and here are two good reasons why:
For starters, cars have never been more dependable than they are today. It’s not uncommon for some cars to deliver more than 100,000 miles before needing major repairs.
Secondly, brand new vehicles are not a good investment. Unless you have a historic vehicle like a 1926 Oldsmobile that was used in the prohibition days, which may have sold for around $1,000 back then, then it could be worth $20,000 these days. But who has almost 100 years to wait for that kind of inflation? I’m just trying to make it to 60!
When we buy a new car, trying to make money on it is not usually the reason. We buy them because it’s a necessity for everyday use. Buying a new vehicle depreciates much faster. If you’re not sure, use a car loan calculator to see how much less your monthly payment would be if you bought used instead.
You can find how much cars depreciate on several automotive websites, such as Kelley Blue Book’s 5-Year Cost to Own or Consumer Reports’ Cost of Vehicle Ownership.
More reasons to buy used
All cars require regular maintenance such as oil changes, tire rotation, and brake jobs. But you can drive today’s cars much farther in between these scheduled maintenance visits. Even tires and brake pads last much longer than before.
– Lower car insurance rates:
When a vehicle is worth less, it costs less to insure it when you’re buying collision and comprehensive coverage.
– Cheaper renewals:
In fact, the registration is already paid for some of our cars in stock. The new buyer only pays a $15 transfer fee and the cost of registering a used car goes down every year.
– Less stress:
Got a ding in the door? Who cares? But when it’s the first dent in your new car – it’s a big deal!
Check out 2016-2019 used vehicles that are still under the factory warranty and your bank account will thank you.
Hope this helps!
Richard Perry is the owner of VIP Autos in Hemet and is known to his readers in the Chronicle as the Hemet Car Guy.