Buying a New Car Could Be Cheaper Than Buying Used

January 22nd, 2019 by

If you’re torn between buying a new car and or a used one, you might be inclined to pick up a used car with a few more features. It may seem like the most logical option- cars are more reliable than ever, so a few thousand miles on the odometer shouldn’t be a big problem. But many shoppers don’t realize that buying a new car actually may be less expensive. Here are some reasons why.

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Interest Rates

Interest rates are one reason a used car may be more expensive than a new one. Most lenders offer much higher rates on used cars than new ones, even if you have a great credit score.

The main reason is that a used car carries far more risk to a lender than a new car. A lender knows a new car’s condition exactly, while a used car is more of an unknown guess. It’s also easier for lenders to project new-car depreciation, as several companies make resale forecasts. Not so for a used car, where the future value is far more uncertain.

As a result, a shopper considering a new car at a certain price and a used car that’s only slightly less expensive may find the monthly payment to be higher on the used car because of the interest rate — and it can be enough to send shoppers back to the new model.

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Maintenance Costs

Modern cars are far more reliable than vehicles from five or 10 years ago, but that doesn’t mean they’re immune to breaking. A shopper who thinks he got a great deal on a used car may find the vehicle needs a lot of maintenance. And since many used cars come without a warranty, these costs may be entirely out of pocket.

Also, more and more automakers offer free maintenance on new models. This means shoppers can buy a new car and receive free scheduled maintenance, such as oil changes and tire rotations. Between that assurance and the potential hassle of used-car maintenance issues, a new car may come off cheaper than a used one, even though it doesn’t seem so up front.

While buying a new car may seem daunting- especially if you’re familiar with pre-owned models- we suggest weighing your options carefully to make sure you really are saving money with a used car. If you have any additional questions, feel free to contact us here at Bayway.

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