Trading In Your Car For A Cheaper Car

Is it Better to Buy a New or Used Car in 2009?

The bleak economic picture has many people who need to buy a car in a quandary as to whether it is better to buy a new car with the many deals and 0% financing available or a good used car.

There are great deals to be made out there on new cars. Car companies are offering 0% financing and large discounts on cars. Those people with good credit ratings and job security who prefer to buy new cars and need a new car should be looking in 2009. It is still important to shop around to make sure you are getting the best deal. There are excellent warranties on cars today so it is important to feel comfortable with the service department of the dealer you purchase from. You will most likely be taking your car there for years to be serviced.

There are additional costs associated with buying a new car versus a used car. Depreciation is a significant expense to the new car buyer. Cars can depreciate anywhere from 20% to 40% in the first year after purchase. They typically depreciate 15% the 2nd year, 13% the 3rd year and 12% in the 4th year. People are keeping their new cars on average about 5 years today unlike 20 years ago when they would trade every year or every other year. If you go to trade your car in the 5th year it has depreciated approximately 70%.

Taxes are another additional cost associated with buying a new car versus a used car. Typically taxes are a lot lower on a used car than a new car. Insurance costs can be much higher on new cars. Some states require consumers to buy full coverage for new cars and only require liability coverage for used vehicles which is much cheaper.

New car prices are affected by the state of the economy much more than used car prices. Typically, automobile companies have several layers of incentives for dealers and during a weak economy they can offer more vehicles at lower pricing to dealers combined with attractive financing packages. Used car dealers, on the other hand, still purchase cars predominantly at auctions and put the same profit margin on vehicles during bad times or good.

The decision to purchase a new or used vehicle in the current recession requires considering many variables. The most important variable is what makes the most sense for the consumer based on their financial situation. If there is any doubt about job security or if the consumer already has high levels of consumer debt purchasing a cheaper used car and paying with as much cash as possible may be the smartest choice .to make.

About the Author

Greg Chapman of Greg Chapman Motors is a knowledgeable and leading provider of used cars, trucks, and SUV’s. Since 1959, Chapman motors has supplied reliable used cars in Austin and the surrounding area and is known as one of the bad credit car dealers in Austin. For more information please visit http://www.gregchapmanmotors.com.

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