Used Cars are Expensive
Car buyers browsing the car market for cars trucks and SUVs want a great deal, but may get sticker shock from the extreme high vehicle prices. If your budget is tight and you need to choose between a new car and a used one, you may think of picking up a used vehicle from the car dealership – especially with the increased reliability of vehicles, a vehicle hitting higher miles shouldn’t be a major issue anymore. Yet new vehicle prices may by lower than used vehicles in certain cases!
Interest Rates on used cars trucks and SUVs
The interest rate that you pay on a used vehicle may be higher from a car dealership, meaning that you are looking at a higher monthly payment. This is because a used car is more riskier to lend for than a new car for the car dealership or bank. The car prices for a new car are solidly defined, as are their depreciation rate and vehicle history. This means that the lender can get a great deal giving you extreme high interest rates on used vehicles with higher prices than the lower average price new vehicle.
Maintenance Cost over time
Modern vehicles are certainly more reliable than they have been at any time in modern history. Cars trucks and SUVs are coming equipped with more diagnostic features than ever, and the car manufacturers now have many decades of experience building each vehicle and engine type to fix the flaws the you would previously see each vehicle hitting. This improvement has been factored into car prices, and also in the decrease in car sales. In 2018 the average new vehicle could drive (with maintenance) for well over 100,000 miles, and seeing a vehicle hitting that mark in perfectly good condition is no longer a rarity. The average price of entry level vehicles has not shifted much (though more expensive trims and models see every higher prices in the car market), and car buyers are getting passed the benefit of decades of testing from manufacturers.
This means that you can have a great deal buying a used vehicle that is relatively modern, without the extreme high rate of repair usually associated with purchasing second hand cars from an individual or from a car dealership. New vehicles also come with more expensive parts and systems which are harder to repair and replace. A great deal of expertise and experience is needed to fix the advanced electrical and diagnostic systems on modern cars trucks and SUVs. In 2018 the average cost of repairs skyrocketed with the introduction of electric vehicles such as the Tesla Model X and the Model 3 – even trying to get a headlight replaced on a vehicle like this is enough to give you major sticker shock!
You can get a great deal on a used vehicle
The vehicle prices at a new car dealership will have a much higher average price than the car prices at a used car lot, and definitely higher than purchasing from another person online via AutoTrader, Kijiji or other similar car sales web pages. These new car prices are virtually locked in to a certain price out of the manufacturer, and the car dealership can’t let them go without the vehicle hitting higher prices than they paid to stock it in the first place. While this is of course true for car dealerships and private vendors, they weren’t locked into any price by the manufacturer and you could get the car sales price lower than their own cost if they really need to get rid of it! A used vehicle sitting on the lot or on an online car market for multiple months (or even years!) is a liability for the seller, each extra month it is taking up space is almost like a monthly payment for them to hold onto the vehicle. You can get a great deal if you find a used vehicle that the car dealership or private seller is just hoping to get rid of. Car buyers should look for cars trucks and SUVs that show signs of aging, if you see a vehicle hitting its past-prime date you can snatch up a great deal!
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