For many of us, the world has seemed anything but right-side-up the past few years. In fact, upside down is an apt description for most of us, from our professional lives to the mortgages on our homes.
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As it happens, the reverse is true of our new car purchases. In an upside down economy it is now cheaper to buy a new car than it is to buy a used car.
You might be asking yourself if you read that correctly, but have no doubt. The market now is offering better deals on new cars than buyers have seen in decades. The used car market, especially given the rate of depreciation, just cannot keep up.
Today’s average interest rate on a new car purchase in about 4 percent. Meanwhile interest rates on a used car is hovering around 8 percent. Even financiers see the advantage to buying new and so they are trying to drive consumers in that direction.
In 2009 the “cash for clunkers” programs cleared about 700,000 used cars from the market, and the economic crisis that hit new car sales also pummeled the used car market in terms of trade-ins.
In fact, deals on today’s new cars have gotten so good that a five year deal on a new car is outpacing a one-year deal on a used car. That is quite a bargain.
If you plan on paying cash for your next vehicle you don’t care about interest rates and deals, but if, like most of us, you intend to finance your next vehicle, a new car is definitely the way to go.
There are other advantages to buying a new vehicle as well. First, fuel economy is much improved. Even in a vehicle just a few years old you can see a 10 to 20 percent improvement in fuel economy with a new model. That fuel savings adds up over time. If you drive your car for five years that is a significant savings in fuel alone.
New cars also have the advantage of improved safety features. Things such as improved safety restraint systems and braking packages can help you lower your insurance bill each month, saving you a ton of cash over the years.
A new car is also going to cost you less to maintain over time. New parts means less replacing in the short term. You can rely on your new car, and the warranty you are likely to get with it, to keep you rolling for longer. With a used car you often face unexpected costs associated with repairs and maintenance. Additional repair costs are just part of the bargain that comes with every used car purchase.
If you are looking to buy yourself a new car and want the very best deal you can get, don’t bother checking the used car markets. Go ahead and get yourself a new, new car and get the very best deal available. But hurry, these deals are not likely to last forever. The economy is already starting to rebound and once the world turns right-side up, so will the new car/used car market.
