UNITED STATES, Mar 27 — The days of splurging on the latest greatest everything are gone, and nowhere is the difference being felt more than in the automobile industry. People are repairing their old cars and hanging on to them. If they really need a car, many people are looking at used cars.Which is the most cost-effective decision – new or used? It depends on your situation
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he days of splurging on the latest greatest everything are gone, and nowhere is the difference being felt more than in the automobile industry. People are repairing their old cars and hanging on to them. If they really need a car, many people are looking at used cars. But everything is about supply and demand. The prices of good used cars are going up as the demand increases. At the same time, as new cars sit on silent lots, dealers are offering rebates, low financing and price reductions.
So if you’re looking for a car, which is the better deal? Well, it depends.
Financing Dealers are offering great interest rates on new car loans – as low as 0% for 60 months on many models. Used cars are typically financed at about 7% for a three year loan. The longer loan period on a new car combined with the low (or zero) interest rate will lower your monthly payments. But often the lowest rates on either new or used cars are only available to those with stellar credit. If you are able to pay cash for a used car, you could avoid payments altogether.
Repair Costs Repair costs on a new car should be very low. The warranty covers all major repairs for the first few years. Expect repairs costs to be higher on a used vehicle. That depends, of course, on how old the car is and whether it comes with a warranty. A one year old car with low mileage shouldn’t be too much different than a new car. Many dealers will “certify” a used car that’s in good condition. It may be worth the slightly higher price tag to get a car that the dealer is willing to offer a warranty for.
Gasoline Expenses How far do you drive? Gas guzzlers are no longer in vogue, and their prices show it. If you don’t drive a lot, getting a used SUV should be very inexpensive. Do the math on how much you expect to spend on gas and what the price difference is between a gas sipper and a gas guzzler. Does your teenager drive to and from school 3 miles away? A used SUV might be the perfect choice.
Insurance Typically insurance will be higher on a new car because the price is higher. For insurance, though, the model of car will make a difference too. For a new driver or a driver with a less than perfect record, insurance costs will play a bigger role. Which is the most cost-effective decision – new or used? It depends on your situation. But don’t discount the possibility of a new car without checking it out. This may be one of the few times in history that you can get a better value on a new car than on a used one!
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