Of Used Cars and Other Mostly Boring (but useful) Matters…………

Russ Ege was one of the original members of the Coffee Shop. He had a great saying that I still repeat about a place where he bought cars: “I like going there because you don’t have to worry about whether you got a bad deal – you did!”
Now, not every car buying experience needs to make you feel like Russ did but it is a major purchase with lots of unknown variables. Without knowing what you are getting into, it is possible to spend money unnecessarily.

This is why most people, especially younger people just starting out, should consider buying a used car. First and obviously, the price is less (no duh as my nieces would say). But it is more important than you think because the lower price equates to a lower monthly payment. This extra “cash flow” can be used to create a source of savings. Since saving earlier makes a tremendous difference in the ultimate value in any investment, this simple decision could lead to a substantial savings balance. The reverse is too common: the payment is so high, the buyer ends up living “check to check” which puts them at risk for needing to borrow more money if something unexpected pops up. The ultimate situation is to have the vehicle long enough that the loan is paid and you can drive the car for at least a little while with no car payment. Then you really can rack up the savings.

Another very important reason: the depreciation factor (fancy word alert: depreciation is just the act of something losing value over time). A very large percentage of the total depreciation in a vehicle takes place in the first 12-18 months. In other words, when you buy new, your purchase loses substantial value (sometimes 40%) right away – kind of like a bad stock that you can drive to the coffee shop. Now, different vehicles depreciate at different rates but it isn’t hard to figure out. Just go to www.cudlautosmart.com (or click the link from our website) and look up the value of the newest model year and then compare it to the value of a vehicle that is, say 2 model years old. Do this for each of the vehicles you are considering and you will see how the rate of depreciation differs from one vehicle to the next. Regardless, buying a vehicle after the big drop in value will put you way ahead of buying new.

Want another good reason? You can get many 12-18 month old vehicles that have very low mileage and are in great shape. You still get to have the vehicle for a good long time, just like a new car and it will even have substantial warranty coverage left.

Here are a couple other good buying tips: call your insurance agent and find out what insurance will cost for each of the vehicles you are considering – it can vary greatly and really adds up over the life of the vehicle. The other thing is to make sure and shop around and compare prices for similar vehicles. This can also be done via the internet pretty quickly (again www.cudlautosmart.com is excellent) but the bottom line is that you need to have some idea of what the market is for the car before you start talking about the price. This can vary depending on the area you are in and the type of vehicle. The only way to know for sure is to check around.

If you take a little time and do the math, I think you’ll see why it makes sense to consider buying a used vehicle. You potentially can save thousands of dollars (maybe more) and still drive something with the new car smell. One more thing - you’ll get less irritated from the inevitable first door ding.