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That’s some comforting news at a time when everything seems to be costing more.
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There was a point not so long ago when used car inventory was so low that buyers were scrambling to purchase previously driven vehicles. That drove the price of used cars way up.
But thankfully, used car prices have come down a lot. In January, the cost of used vehicles was 11.6% lower than it was a year prior, according to that month’s Consumer Price Index.
For some people, buying a used car is not ideal; they’d prefer to have a new vehicle with more updated features. But buying a used car could benefit you financially in more ways than one, so it may be worth it to forgo the new car — and buy a used one instead.
Fewer expenses on a whole
Consumer borrowing rates are up broadly these days on the heels of rate hikes on the part of the Federal Reserve. As such, it’s not the best time to sign a new auto loan. The upside of buying a used car is that your auto loan payments might be lower than what you’d face with a new car, since you’re likely to spend less (potentially a lot less) on a vehicle that’s previously owned.
Also, a used car might be less expensive to maintain and repair. Those fancy new car features you’re craving? They might result in higher bills through the years. An older car might result in fewer bills — and put less of a strain on your savings account.
Your insurance costs could be lower, too
Auto insurance companies take different factors into account when setting premium rates. One factor, for example, is the amount of experience you have as a driver and what your driving record looks like. Another factor is where you live. If you live in an area with a higher crime rate, you’re apt to pay more for auto insurance than if you lived in an area with a lower crime rate.
Similarly, the cost of your car is going to play into the cost of your auto insurance. The reason? If your car is totaled, it will cost your insurance company more to replace a new car than a used one. And so if you’re willing to purchase a used vehicle, you might end up with lower car insurance premiums.
Is a used car risky?
When you buy a used car, you take on certain risks — namely, that there are lurking problems with that vehicle. To make sure you’re buying a used car in decent shape, research its history before buying. An easy way to do so is to look up its VIN (vehicle identification number) on the National Highway Traffic Safety Administration website.
Another good bet is to take a used vehicle you’re looking to buy to a mechanic before completing your purchase (just make sure it’s a mechanic you trust). That way, they can check it out and tell you what condition it’s in.
There is some comfort in driving off in a brand-new car. But the cost of doing so might be prohibitive these days, between higher auto loan payments, maintenance, and insurance costs. So a used car may be a much better choice — especially now that prices have come down.
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