Unless you live in huge cities such as New York, Atlanta, or Los Angeles, you will need a car to move around in the USA. But it doesn’t need to be brand new!
If you want to save thousands of dollars, buy a used car! Read on find how much I saved and how you, too, can save a lot of money!
Why You (Most) People Buy a Brand New Car
Let’s face it. People want the smell of a new car. You open up the door, sit down and the smell of success hits you. Buying a new car makes you feel like you’re a big time! That you’ve made it. And you can move around in style! Different brands have different reputations, too! A BMW or Mercedes Benz will turn people’s heads and will give you a reputation that you’re either a big shot, or on the way there.
With new cars, you should also have fewer headaches with maintenance problems. The conventional wisdom says that since the car just rolled off from the lot, if you maintain it properly, it should last for a long, long time!
Why It’s Better to Buy a Used Car
Brand new cars depreciate right after you drive off the lot.
In fact, it loses 20% to 30% of its value at the end of the first year! If you bought a new car at $20,000. It will be worth about $16,000 at the end of your first year of ownership. By buying a used car, you won’t need to worry about depreciation.
Cars bring you from Point A to Point B. Used cars do that just as well as new cars!
Some drivers don’t maintain their cars well. But most dealerships inspect used cars before they sell them. Worried if the car had been in an accident? You can check the history of a car using Carfax or Autocheck. If you are worried about any mechanical problems or engine issues, you can always ask a mechanic to check the car before buying it. It’s called doing your due diligence.
How I Saved Thousands by Buying a Used Car
When I arrived in the USA in 2015, the very first car I bought was a 2012 Kia Forte for $8,000. Back then, it was a 3-year car model. It wasn’t great. But it did the job. If I bought a brand new car then, it would have cost around $17,000.
When I bought the car, it had about 68,000 miles. It drove pretty well, no major problems, and we had it for five years until we traded it in for a minivan in 2020. Here’s where I was able to save:
- Up front, I saved $9,000 by buying a used car instead of a brand new car.
- I also saved money on interest by getting a loan from a credit union, instead of a bank.
- Our monthly payment was $285! Some of our friends who were also immigrants were paying $500 monthly for their brand new car because of high interest rates.
- The only major repair problem I encountered was its transmission. It cost me about $500 for the repair.
- Its trade-in value was $3,500, which helped reduce the cost of the minivan we purchased!
- If I take into account the interest I paid, the car probably cost me around $11,000. But since I got back $3,500 in trade-in value, the total cost for me was $7,500 for the whole five years we owned it!
How I Saved Thousands When I Bought another Used Car
In late 2016, my wife and I realized that we needed another car. There were times that I had to be in my office and she also needs to take our son to school, to the library, or she just needed to go somewhere. So I looked for another car, preferably a SUV so I could haul furniture and some bigger stuff.
As luck would have it, I found a 2007 Ford Escape LTD! And guess what, it only cost $5,600 since it was old and had 130,000 miles. But it still had a lot of life left. As I’m writing this post (May 2022), I’ve had that truck for almost six years! The only major repair I had to pay for it cost $1,200, which I had to pay in May 2022 because of oil leaks. To be fair, though, the mechanic said it wasn’t something I could really prevent. The truck was just old.
For the life of this loan, I only paid $104 per month! And man, not having monthly car payments is sweet!
Have I Convinced You Yet?
Think about what you can do with extra $200 monthly! That’s the minimum monthly amount you’ll save when you choose to buy a used car. You don’t even need to settle on bad cars. There are a lot of options in the market. Choose one that you like best and don’t settle for ugly ones. Always check the history of the car via Carfax or Autocheck and have a mechanic look at it for your peace of mind.