It has become common wisdom that buying a used vehicle is always better than buying new. Historically, that has been accurate but as the car market and vehicles have changed this rule of thumb needs to be updated. Here are a few things to consider when weighing a used vehicle purchase.
- Not all vehicles depreciate at the same rate. In some cases, a 2 year old vehicle with 20,000 miles may only be a few thousand less than a new vehicle. In that case, you may be better served buying new. Moreover, incentives on new vehicles can be attractive financially and could make the total cost less expensive than a comparable used option.
- Keep your eye on factory warranties. The decision to go “new used” could blow up if your vehicle is outside the main powertrain warranty. Research transmission failure on any model you are considering to get a sense of how common these large repairs can be. While it may seem unreasonable for a relatively new vehicle to have a large, expensive repair it happens frequently. Most powertrain warranties run 3 to 5 years and up to a certain number of miles. Often you will find great deals on used vehicles that are just about to go out of warranty. Do your research on known issues if you are shopping in this space.
- Research recommended maintenance and anticipated cost. All vehicles will have recommended maintenance at various intervals. For instance, most will have fairly significant work at 100,000 miles including costly items such as the timing belt. If you get a great deal on a high mileage vehicle make sure you are prepared for the repair bill.
A used vehicle can be a smart purchase that saves you money long term. Just don’t take it at face value that it is always the best approach to vehicle ownership.
This is not a recommendation and is not intended to be taken as a recommendation. This material was prepared for general distribution and is not directed to a specific individual.
LPWM LLC does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisers.