Purchasing A Used Vehicle

Most people love to get a new vehicle when they it's time for a change in transportation. Car manufacturers and dealers flood all forms of advertising to make this point and consumers bite at this process.

One little off shoot of new car buying is that just about everyone needs to get rid of their present vehicle in order to make room for their new buy (both in the garage and the pocketbook). What happens to those vehicles can be a great opportunity for individuals that are trying to stretch their budget.

New cars usually depreciate about 20% of their value when you drive them off the lot. As an example; for a car that cost $20,000 it would be worth $16,000 as the ink is drying on your new loan.

When you factor in the interest rate you can see why you have to hold on to a car for some time before your cost matches value again. The average process is about 3 years on a 5 year loan.

If however you look at a used vehicle or as the luxury manufacturers like to call them "previously owned" there may be considerable value to loan ratio involved. The first owner has taken the full brunt of the "off the lot" depreciation and now makes blue book value to you a realistic amount.

The price you pay for a used vehicle should be very close to the actual value left plus the interest rate you need to pay the lender.

Buying a used car, motorcycle or truck can be a great cost savings, but you now have to concentrate on another factor that most new car owners usually don't have to and that's repair cost. Many times you can buy a vehicle from someone else and continue to get the warranty that was purchased.

If they have used up the warranty in time or mileage, you now have to compute in the dollar factor on how much a yearly amount will be to keep your car running.

You can get used vehicle from a variety of places including newspaper advertisements, posting in stores, signs on vehicles and from car dealers themselves.

Lots of people shy away from dealers, but you may be able to get a good deal there as well as be sure that the vehicle you purchase has passed a full inspection. Dealers also have an incentive to move the car on their lot as they have officially purchased the car from someone that bought a new car and they have to keep paying as long as it sits on their lot.

This is really no difference than an individual that has to keep making payments while trying to sell a car. There are pros and cons for buying from individuals vs. buying from a dealership and you’ll have to decide where the better deal is for you.