For most families, buying an automobile is a major purchase. Buyers shopping for a vehicle will be faced with a variety of decisions, from make and model to style and color. One of the most important decisions that all buyers must make is whether to limit their search to new or used cars. Here are four reasons why pre-owned models offer drivers more value.
Today’s automobiles are the safest they have ever been. It used to be that drivers had to buy a luxury model to get the safety features that are standard in all autos today. Since 1997, airbags have been standard in all vehicles in the United States, and since 2004, so have anti-lock brakes. Furthermore, electronic stability control has been mandated for all vehicles built after 2012. Other safety features, like backup cameras, have become more common, and some manufacturers include them in all of their models. In short, drivers who purchase used cars are no longer missing out on the most important safety features.
The 1980s saw Japanese automotive makers introduce low-cost, reliable vehicles to the United States in large numbers. Since then, the reliability of all autos has improved significantly. Today, the average age of all registered autos in the United States is over 11 years, which is an all-time high. Whereas drivers in the past would replace their vehicle every few years, modern autos are being driven much longer. This means that a buyer can purchase a pre-owned vehicle and expect to get many more years of reliable use out of it.
Cost and Depreciation
The average cost of a new sedan, truck, or SUV in the United States is roughly $30,000. Once that model is driven off of the dealer’s lot, it loses about 10% of its value. After a year, it has lost a total of 20-25% of its value. After four years, it will be worth about half of the original price. The average price of used cars is $15,000. Along with the lower initial cost, the rate of depreciation is not as great as with new models over similar time periods.
Buyers who are searching for the newest model from a manufacturer only have one place to shop for it: the dealership. While a buyer can look at multiple dealerships from the model’s manufacturer, the prices will most likely be similar, which puts the buyer at a disadvantage when it comes to bargaining. On the other hand, the market for used cars is significantly larger. Pre-owned vehicles can be found on manufacturer’s dealerships, independent dealerships, and through private owners. With multiple markets to choose from, drivers gain a significant advantage when negotiating the price. If the dealership will not reduce its price, the buyer can find the same vehicle from a private owner the next town over, or through an out of state seller online.