Tip of the Week
If you are in the market for a vehicle upgrade, you just might want to consider buying a vehicle that is a few years old. The price will certainly be lower than that of a new vehicle and ownership expenses are often lower as well.
A high-quality used vehicle has already taken its most significant depreciation so you should be able to buy a nicer version with more extravagant trappings. Sure, there are shortfalls too. New vehicles often come with lower financing rates but the lower cost of a used vehicle typically offsets that consideration.
When purchasing a used vehicle you should try to find the delicate balance between value and risk. If you are diligent in your research, use common sense and keep a rational outlook, chances are that you'll ride away in a vehicle that is both a great value and something of which you can be proud. Here are some factors worth considering:
Twenty years ago a vehicle with 100,000 miles on the odometer was considered ready for retirement. That's not the case today. By using improved materials, lubricants and methods in manufacturing, automakers are putting forth a product that is expected to last well over 100,000 or even 200,000 miles without a major overhaul. Late model used cars (less than five years old) have one-third fewer mechanical and cosmetic issues than vehicles manufactured as recently as 2002.
Late model used vehicles often carry existing manufacturer's factory warranties. This can lend some much needed peace of mind during tough economic times. With such items as the engine, transmission and differentials covered by a free factory warranty, you can also be at liberty to make minor improvements and enhancements to your fresh set of wheels. You still need to have any perspective vehicle inspected by a qualified independent technician before purchasing it.
Depreciation is brutal as it pertains to new cars. The average new vehicle depreciates to the tune of 47 percent over the first three years. Some vehicles depreciate more rapidly than others. That translates into a pretty terrifying dose of reality. The average new vehicle that is valued at $27,500 (plus tax, tag and title fees) will only be worth $14,575 after three years.
On the other hand, the same vehicle will only depreciate about 24 percent over the next three years. Check out the used car section of BestRide.com for millions of listings on late-model used cars, trucks, vans, and SUVs.
Interest rates and insurance
Despite the fact that the interest rate is typically lower on new car loans than used car loans, the initial cost is negligible. When average interest rates, between new and used car loans, vary by less than 1 percentage point the monthly payment only ends up being about $10 to $15 more per month. When you figure that insurance is going to cost less for a used vehicle than a new one and the length of the used car loan is normally shorter than the new car loan, it works out to big savings for you.
The final sales tally for 2015 shows that it was a very good year for U.S. automakers, according to Automotive News. In total, automakers sold 17,470,659 vehicles, a number that surpasses the record set in 2000 when the industry sold 17,402,486 units. General Motors saw a 5-percent increase with 3,082,366 sales. Even better Ford reported a 5.3-percent increase with 2,603,082 sales. Fiat Chrysler Automobiles topped the list with a 7.3-percent increase with 2,243,907 sales.
Did you know
How do you know if your vehicle is currently under a National Highway Traffic Safety Administration recall? You can wait for a notification letter to arrive by mail but the easiest way is to log onto the NHTSA website (nhtsa.gov) and do a VIN search. That will tell you for sure. Have your vehicle identification number and production date (located inside the driver door jamb on most models) handy; this information will make it easier to determine whether or not your ride is under a NHTSA recall.
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