Why new cars are such poor value

If new cars weren’t bought of course there would be no used cars so someone has to buy them, why people do choose to buy new cars is often not clear though. For many a new car is a status symbol, a way to show they can afford to waste money on a car that will lose value as soon as it leaves the showroom. New cars are not completely without advantages, they have no hidden history and a long warranty, often three years. With a second hand car though you can easily pay for an extended warranty and a check of the cars past and still get a car just a few years old for much less than it would have been new. Much older used cars of course start causing more problems, many parts have a set life and then start to fail: performance can also go down. A car a few years old may have slightly less time until it starts having problems but you can buy a new used car at that point and still be better off.

The finance deals on offer from new car dealers may for some people be what convinces them, they are often available even with poor credit ratings. With used cars you can still get great finance deals though if you shop around and even if you put zero down. Used car finance generally works out cheaper long term as well. Many new car finance interest rates are higher because the financing company is taking more of a risk, the car will lose value straight away so the collateral instantly has less value than the amount owed.

Jun 7th, 2011