Ah, that new-car smell. For many, it's a wonderful intoxicant, one that lures them back to their favorite car dealer as soon as it fades from their most recent purchase.
But as with other intoxicants, getting hooked on that aroma can be an expensive habit. Two years after your purchase, long after the scents of newness have faded, your new car will have lost a ton of value -- 30% or more, on average. Combine that with the additional hit you'll take if you trade it in rather than sell it yourself, and you could be losing almost half of what you paid for that beast just two years ago.
If, on the other hand, you can live without the robust fragrance of alkanes, benzenes, and aldehydes during your morning commute, then you're in luck. A well-chosen used car can be a reliable, fun, and Foolish purchase that can give you years of (relatively) low-cost service.
Let's look at five reasons why it's worth thinking about buying used the next time around.
- Cars are more reliable than ever. Survey after survey shows that the best current cars provide longer, more dependable service than ever before. Consumer Reports regularly publishes lists of the best used-car bets, based on its own extensive survey database. Get a copy of Consumer Reports' most recent annual auto issue; you'll find great choices in most price ranges.
- Avoid the worst of the depreciation hit. Cars depreciate every year, but the biggest slices of value come off in the first two to three years of its life. A two-year-old car that's been well treated will still give you years of service -- and some of that new-car feel -- for thousands less.
- More car for less money. Want a BMW for Honda money? Or maybe just an Accord for Civic money? Buying used lets you take advantage of someone else's depreciation hit. (But research your maintenance and insurance costs first. BMWs are solid and durable cars, but their parts cost more than Honda's. Buy that dream car carefully.)
- The Internet helps you find what you want. Got your heart set on a red Toyota Prius with a navigation system? Before you start calling dealers looking for a new one, check out the used listings on sites such as AutoTrader.com and Cars.com. You may be able to find the car of your dreams: lightly used, close to home, and at a substantial discount from new.
- Dealer "certification" programs. Nearly every automaker now offers a used-car "certification" program, under which the manufacturer inspects, repairs, and "certifies" recent used cars that then get sold with a warranty. These programs are a notable compromise between buying new and buying used; they give used-car buyers a relationship with a dealer, a factory-backed warranty, and assurance that they're not buying major hidden problems. You'll generally pay a bit more for a "certified" used car versus one bought from a private seller, but the benefits can be substantial.
Some last thoughts: If the car you're considering isn't "certified," run its VIN through CARFAX to check for past insurance claims, and have a local mechanic inspect it before you decide to buy. If the seller won't let you have it inspected by an independent mechanic, don't even bother arguing -- move on to the next candidate.
And finally, although cars from Toyota, Honda, and Nissan have topped the reliability lists for years, don't rule out the domestics. The best products from General Motors and Ford have held their own in recent reliability comparisons, and the higher initial depreciation hit on domestic cars versus imports might lead you to an excellent value purchase.
Keep these tips in mind before you get behind the wheel of your next vehicle. You'll be happy you did.
This article originally ran on June 13, 2007. It has been updated.
Fool contributor and car nut John Rosevear has been surfing ads for used Corvettes, and he's waiting for the 2005s to depreciate just a little more before he has That Talk with his spouse. He owns shares of General Motors. The Motley Fool's disclosure policy always loves a bargain, especially when it's fast, fun, and good on gas.