(Akiit.com) Today’s world is all about having the nicest, flashiest things, and having them now. Many people who struggle to even get enough money together for rent are still dedicated to having the latest model of phone or having a brand new car sitting on the drive of their property. While it is nice to have these things to aspire to, it is hugely detrimental to your finances, and emotional wellbeing, to be constantly struggling to make payments on these luxuries that you just cannot afford.
With all the options available such as Hire Purchase and Contract Leasing, many people are finding that is becoming increasingly affordable to have a brand new, luxury car sitting on their drive, despite the fact that they could never hope to afford the nearly $40,000 list price. Below are the three main reasons that you should consider buying a used car outright instead of making payments on a new car.
Depreciation
The main and most persuasive argument for never buying new is depreciation. For those of you who don’t know, depreciation is the decrease in an object’s worth in comparison to its original purchase price. All cars depreciate, however, many will depreciate at different rates. Luxury vehicles with thirsty engines and expensive parts will depreciate far quicker than a cheap and reliable Honda. On average, a car will lose 10% of its value the second it is driven off the forecourt.
After three years, assuming that you only drive 10,000 miles per year, your brand new car is likely to be worth only 40% of what you paid for it. All of this means that when your three-year lease is up, you’ll have been paying through the nose to offset the loss in value of the car. You may well choose to trade it in for a new model, but then you continue paying huge amounts of money for a car that might as well run on gold-infused gasoline.
Ownership
If you currently lease, you will likely trade in for a new model every three years. This means that you are paying hundreds every month to essentially borrow a car, as well as paying for the fuel, tax, insurance and all other costs. By buying your car outright, either in cash or with the use of personal secured loans, you ensure that after you have finished paying back your loan, the car is yours. Yes, this means that you will likely have to pay for the annual servicing yourself, and some more long-term consumable items such as wheel bearings might need replacing, but your local car parts shop should be able to help with this. At least you are paying money to keep your car going, not one you just happened to have borrowed.
Choice
This is the great thing about buying a used car compared to leasing one. You can afford to buy and run a much more exotic or luxurious car if you are buying used. Cars that are over three years old can cost less than half of their original value, meaning that you can grab yourself a real bargain. If you’re feeling brave and are handy with a spanner, you could even go for a car that is over fifteen years old and get a top of the range luxury vehicle for a few thousand. However, the downside is that these cars are normally in danger of having very large repair bills in the near future, so buy wisely.
There you have it, three excellent reasons to buy a used car instead of a new one. Pick wisely, and you’ll have many years of trouble-free motoring at a fraction of the cost of leasing a new vehicle.
Staff Writer; Terry Adams