How Purchasing a Used Car Can Help You Achieve Your Financial Objectives
Posted Sunday, Sep 10, 2023
According to reports, approximately 16% of the average American's budget goes toward transportation, including fuel costs. This makes transportation rank high among the major expenditures after housing. Furthermore, the average cost of purchasing a new vehicle has hit a new high, reaching 46,290 US dollars in 2022.
The cost associated with vehicle ownership in North Attleboro, MA can make buying a vehicle stressful, especially for individuals with major financial goals. For such buyers, purchasing a used vehicle offers several advantages. This article sheds light on how buying a used car can help you reach your financial goals.
Buying a Used Car Can Help You Reach Your Financial Goals
Below are a few ways that buying a used car can empower you to reach your financial goals quickly:
1. Immediate Savings
Upon purchase, new vehicles will lose around 20% of their value. Moreover, a car's value will continue to depreciate in the first five years after purchase, falling by approximately 60% once it hits the five-year mark. In contrast, a used car doesn't come with immediate depreciation losses since the previous owner has already absorbed the loss. This allows you to enjoy immediate savings on your purchase when you choose to buy a used vehicle.
The money you save upfront can go towards your financial goals, whether paying for a wedding, buying a home, or building a retirement fund. For example, if your goal is to pay off your student loan, the savings from a used car purchase can significantly contribute to that goal, allowing you to make additional payments toward your outstanding balances. Moreover, you can also invest the saved amount in assets like stocks, gold, or property that have the potential to grow over time.
2. Lower Monthly Expenses
Aside from the immediate cost savings, owning a used car can allow you to enjoy low monthly expenses. Used cars are usually accompanied by lower insurance premiums. Insurance providers consider a vehicle's market value when determining rates. Therefore, you can expect to pay low monthly insurance premiums since used vehicles have a lower market value.
Lower insurance costs can empower you to save additional monthly funds that can be redirected toward your financial objectives. Furthermore, used cars also come with lower registration fees, further adding to your savings.
Although lower monthly insurance premiums and registration fees may initially seem minimal, these savings can significantly affect your budget. By saving money on insurance premiums and registration, you can enjoy financial flexibility and allocate resources toward achieving your goals.
3. Lower Maintenance, Repair, and Replacement Expenses
When buying a used car, vehicle owners can be assured that they won't have to pay exorbitant prices for services if their vehicle requires repairs or replacements. Since used cars have been on the market for a while, their parts are readily available at low prices. In contrast, if your new car requires repairs or replacements, you can expect to pay high amounts for the parts and services.
Newer vehicle model parts may be more difficult to acquire and demand the expertise of highly specialized mechanics. Therefore, besides paying for the expensive parts, you may also have to pay for the services of professional mechanics - which can add a few hundred dollars to the total bill.
Some may argue that newer vehicles require fewer replacements, repairs, and maintenance visits. However, considering the cost you will have to pay for even one repair or maintenance visit to a dealership and the other variables like savings on depreciation and monthly interest rates, you still save a significant amount of money by opting for a used car.
4. Flexible Loan Options and Low-Interest Rates
When you buy a new car on financing, you will likely have to pay high-interest rates. In contrast, financing a used car purchase comes with much lower interest rates. Moreover, apart from lower interest rates, used car dealerships typically offer more flexible loan options.
For example, to qualify for financing on a new car, you must maintain a set amount of credit score. On the other hand, lenders are much more lenient when offering financing on used vehicles and may often allow interested buyers to get financing regardless of their credit scores.
These reduced interest costs can help you save a set amount of money every month, freeing up funds for other financial goals. Moreover, when you opt for a used vehicle, you can negotiate with credit unions or banks for more favorable loan conditions, like longer repayment periods and lower interest rates.
5. Enhanced Budgeting
Buying a used car is excellent for individuals who live by financial principles like avoiding unnecessary debt or living within their means. This approach to financial management can positively impact other areas of your life and allow you to create better budgeting habits.
Since you will save significantly each month through lower insurance premiums, repair or maintenance expenses, and interest rates, the savings will allow you to handle your monthly budgeting better.
When buying a used vehicle, you prioritize long-term financial stability over short-term gratification. This decision can help you make more well-informed financial choices regarding education, housing, investment, and retirement planning - ultimately helping you reach your financial objectives more quickly.
Final Verdict - How Buying a Used Car Can Help You Reach Your Financial Goals
Purchasing a used car is a practical decision and a smart strategy to accelerate the journey toward your financial goals. By buying a used car, you can save on depreciation, monthly interest, repair and maintenance expenses, etc., allowing you to use the savings to reach your financial objectives.
If you want to purchase a used car, we recommend visiting Advanced Auto Sales to browse a wide inventory of affordable used vehicles. The used car dealership has been serving the residents of Massachusetts and Rhode Island for years. They offer flexible financing options, regardless of your credit score. Individuals requiring vehicle financing can contact the dealership today for more information on their options.
