Used 2007 Cadillac
It all depends on whether you are making your purchase based upon emotional or financial considerations.
New cars loose almost 40% of their value in the first three years. With a used car you have lower registration and license fees which are usually tied to the value of the car as well as lower insurance premiums. These days, cars last a lot longer than in the past, so a car with 40,000 or 50,000 miles can still have plenty of life.
A hypothetical new car costing $20,000 with a 3 year loan at 6% and a $3000 down payment will have a first year cost of ownership of $11,500. The total cost over three years will be a whopping $32,300 After five years the value of a $20,000 new car has slipped to a value of around $7000
A hypothetical used car coasting $10,000 with a three year loan at 6% and a $2000 down payment will have a first year cost of ownership of approximately $6570 and the total cost over three years will be around $18,390. After five years the value of the used car has slipped to $2000
In these two scenarios the total cost of ownership over the five year period for the new car comes in at $25,388 while the used car only cost $16,390
To sum up if you have to have the latest and greatest and don’t mind spending $10,000 more for a vehicle then go for the new car, but if you only make a modest salary, have kids to put through college or are a frugal person the used car is certainly the way to go .
Many used cars are difficult to tell from new cars if the previous owners took good care of them.
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