Why Now Is the Time to Buy a Used Car

Libby Kane
Posted

buying used carsNew or used?

That’s not the best thing to ask yourself when buying, say, a mattress, but when it comes to cars, it’s a fair question.

Cars are the textbook example of a depreciating asset, which means they start losing value once you drive them off the lot. This isn’t such great news for people buying a brand-new car, but it could work toward the benefit of those with their eyes on used (ok, “pre-owned”) vehicles. That less-than-new car will keep losing value—but you’ll likely never pay as much as the car’s original owner.

If you’re in the market for an almost-new car, MarketWatch, citing data from Edmunds.com, reports that now may be the time to buy. Average prices for used cars are at a four-year low, especially for Volvos, GMC cars and Chevrolets. (Toyotas, Hondas or Lexuses, however, are so popular that their prices are higher than average).

The reason secondhand buyers are so well poised is because there has been an uptick in demand for brand-new cars, and many leases are coming up for expiration. These factors add to the inventory of used cars, and dealers are lowering prices to entice buyers into clearing the lot.

Of course, just because you know that now is a relatively good time to buy doesn’t mean that you should run to your dealership. Like with any major purchase, it’s important to do your research and make sure you’re getting the best price you can manage. Edmunds.com’s True Cost to Own tool can help estimate the total price of car ownership, including such factors as taxes, fees, insurance and maintenance.

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  • CrankyFranky

    yep – I believe for new cars the way highest cost is depreciation – typically $’000′s a year. For big new cars depreciation alone can be like $7000 a year.

    I’m in Oz so different numbers from US, but here the average car age is like 10yo – I drive a 22yo Honda (it keeps working) and track my expenses – last year my main costs were registration and insurance at around $1000, repairs about $700, fuel about $400 (I don’t drive much), depreciation maybe $300 – total about $2400