If you’re shopping for a car, there are many reasons to choose a used car over a new one. The first is cost. Along with actually paying more for the new car, you’re also paying more in sales tax. As well, it costs more to insure it every month, as well as register it every year.  And cars don’t increase in value the way real estate often does. In fact, they depreciate, rapidly. Which means you lose 20% of the value from the moment you buy it.

According to Kelley Blue Book, the average cost of a new car in 2018 was over $30,000.00.  (Along with the highest prices yet for new cars, Forbes reports that missed payments have gone up as well.) Due to depreciation, or the fact that once you drive your car off the lot, it’s no longer new, you’ve lost $6000.00 right there. You are immediately underwater, and owe more than your new car is worth- on the first day you own it. And within three years, that car has depreciated to a value of $15,000.

When the owner of the new car sells it, and you can buy it, you are beneficiary of this depreciation. The original owner has absorbed it. Even if you’re buying from a used car lot, you’re still benefitting.  And a used car depreciates less drastically. If you buy that car for $15,000.00, and then sell it in three years, you can probably get $10,000.00 for it. So the difference is substantial. You can also research cars that hold their value- we have a blog post on this you can visit here.

What is often missing when purchasing a used car is that new car scent everyone seems to like so much. But you can buy that at Home Depot for $10.61. And still be $14, 989.39 ahead.