Buying New vs. Used Cars

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Buying New vs. Used Cars Powered By Docstoc
					by: Mantius Cazaubon

New vs used. Which car is right for you? Consider the following.

Owning a brand new car is exciting. But financially speaking, it makes more sense to buy a used
car. As soon as you drive a new car off the lot, it loses a great portion of its value. This is
because your car is no longer ¡°new?

New cars lose about 40% of their value within 3 years, then depreciation starts to slow down.
Why not buy a used car and allow someone else to take that depreciation hit?

The previous owner will have absorbed the steepest part of the depreciation cycle. At that point
the costs of owning and operating the car will be reduced. The money you save on depreciation
will surely go a long way.

Another benefit of buying used is lower cost. By buying used you pay less. You will also save on
financing costs, insurance premiums, registration and licensing fees. You don¡¯t have to worry
about paying sales tax.

As with everything else there are a few downsides to buying a used car. There are greater
chances for costly unwarranted repairs. You may very soon have to do major maintenance on
your car, including replacing tires, battery, brakes, muffler, and perhaps even the transmission.

A used car is usually less reliable. You don¡¯t know exactly what you¡¯re getting into and how
the previous owner treated the car. However, every situation is different and some used models
may actually be far more reliable than some new ones.

If you can pay cash, go the new car way. Enjoy the feeling of knowing you're the original owner
of a new car in mint condition. Nothing can replace that feeling.

Otherwise do not hang your hat higher than you can reach. Practice financial prudence. Save
your money and comfort yourself knowing that one day you will be able to afford that dream car.
One day when money is no object.

This article was posted on August 10, 2005

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