What Carries More Value: New or Used Cars?

A new car can mean so much to a buyer — the latest in automotive technology, the wonder of a fresh possession that has never belonged to anyone else, and the great feeling of owning something brand-new. What a new car rarely is, though, is good value.

car value

New cars sell at an unjustified premium

It’s a tough fact of life – – the high price of a new car isn’t entirely down to its quality feature list or its brand value. According to Garden State Honda, Clifton, NJ, 10% of the sticker price of a new car is attributable simply to the fact that it’s new. Another 5% comes from a number of factors: the dealership’s retail margin, the licensing fees and taxes, none of which translate to used car value. This means that whatever you pay for a new car, you lose 10% of its value the moment you sign. Then, you continue to lose another 7% each year. A three-year-old car, then, is only worth three-quarters what it was when new.

This makes no real economic sense. A three-year-old car hasn’t burned up a quarter of its serviceable life. Valuation of this sort is the result of manipulative market forces, and there’s nothing you can do about it as long as you buy new.

When you buy used, you get to neatly circumvent these dynamics. A used car’s price doesn’t include new car dealership margins or the new car premium. You only pay for what you get — which, if you choose well, is a lightly used, nearly new car that is functionally indistinguishable from a new car. This one area alone makes used cars much better value than new cars.

The peace of mind angle

Many people will stay away from used cars for the simple reason that it stresses them to think that they could end up with a bad deal or a car that doesn’t work well. It’s important to see, though, that new car dealerships aren’t above reproach when it comes to fair dealing; they are known to take advantage of customers, too. Used car dealerships are far better; there’s less money at stake. As with any other business that you deal with, it takes only a little homework to find a good place.

The warranty angle

When you buy from an unauthorized used car lot or a private seller, you do need to put in more work to make sure that you’re getting a good product. These cars come with little or doubtful warranty backing, after all. Authorized used car retailers, on the other hand, do offer thorough warranties. You get used car value and the peace of mind of a new car purchase.

Finally, remember the environmental value of a used car purchase. The manufacturing processes involved in each new car produced contribute massively to the contamination of the environment. Resolving to always buy used cars, you do more for the environment than any hybrid car buyer ever did. That’s one of the best values around.