In today's world, it can be difficult to manage without having a vehicle. However, buying a new or used car is a big expense, therefore, if you are in the market for a new car, you might want to know if it's the right time to buy. When looking to buy a car, it can be beneficial to measure your different options first. New is shiny and out of the box, but sometimes it can be worth the wait to buy a used car also.
Here's what you should know about new versus used cars, and when it's worth the wait to buy a used car.
Book value describes what a car is worth “on the book”, or officially on the record. When a car is bought new, you're buying it according to the book value – which is not the same thing as the sticker price. Book value will take the car's past repairs and current flaws into account, as well as the vehicle's model and year.
Official car valuations and new cars are sold by their book value.
The sales price of a car is what a seller wants for it, and what a buyer is willing to pay for it. However, the final price is what the buyer and seller are able to come to an agreement on. This transaction process is the same for both old and new cars. A sales price is determined by several factors, though book value will influence the sales price of a car. If the difference between book value and sales price (or asking price) is too great, in some cases negotiations might stall.
A car's immediate book value will diminish the moment the first owner starts the newly purchased car. This remains true for every mile driven from the moment they drive the car away from the dealership. A new vehicle's book value will lower depending on its use, and can go further down with any damage to the vehicle.
When you are trying to calculate how much a car is worth (and whether it's worth the wait for the new one), examine the price of that same vehicle, but brand new. Compare the cost of the brand new vehicle to the price of what they cost on the used car market at the time.
Industry experts suggest a car's book value drops by as much as 20 to 30 percent after the first two years. When more time has passed since the car was sold or serviced last, the value of the vehicle may drop even further.
This is a great example of why older cars cost less. The older they get, the cheaper they often become.
New cars have a lot of benefits, including the idea that you get to choose the finer details like the color, or features. However, the luxury of choice is often worth hundreds (sometimes thousands) of dollars, whereas there are other options to buy the same great car at a reduced price on the used vehicle market.
If you have seen the perfect model of a new car you want, roll back the clock and look at the same model from a year or two prior. Usually, a few years difference doesn't change the engine or main features, though you get the same basic car shape without having to pay for the higher priced new vehicle.
Always do your research before buying a used vehicle. It is always a good idea to test drive and look at what's under the hood before purchasing a used car. If you don't know what you're looking at yourself, consider bringing along a friend or colleague that knows what to look for, or, ask if you can take the vehicle to an auto mechanic for inspection before signing the dotted line.
There's a huge difference between used and very used cars and not just the price.