When considering whether to buy a new or a used car, people always consider the negative aspects of buying a used car such as the increased maintenance expenses, the fact that the car isn’t as cool to drive around in, and that you never know what the previous owner did to the car. However, people often overlook some of the biggest ways that used cars can save them money. Obviously the initial price of a used car is much less than a new car, but I would like to touch on some of the more overlooked savings in used cars.
To give a little background, I graduated from college and bought a brand new 2012 Volkswagen Jetta. I definitely like the car, and I never really worry about any maintenance expenses on the car. Even if something did go wrong on the car, it would still be covered by the warranty. When I got married to my wife she was driving a 1995 Geo Prizm that she paid about 92% less than I paid for my Jetta. Obviously it’s not the coolest car to be seen in, and it needs maintenance from time to time, but overall it’s a great car.
Auto insurance is the first hidden way used cars can save you money. Currently we pay $193.22 less per year to insure our 1995 Geo Prizm than we do to insure our 2012 Volkswagen Jetta. Some of this savings has to do with the fact that we do not have collision coverage on our Prizm. As cars get older and lose their value, they become cheaper for insurance companies to insure, and that savings is passed along to the consumer.
Property taxes are another way in which used cars can save you money. Not all municipalities asses property taxes on vehicles, so this savings will not apply to everybody. According to our cities property tax rates we will pay an estimated $210.60 more in property tax on our Jetta than we will on our Geo Prizm this year.
According to these figures we are saving at least $403.82 per year by having an older used car. Another thing to consider is that the Jetta is already two years old. If this comparison had been made using figures of 2014 or 2015 vehicle models the savings could be even greater.
Used cars definitely have their downsides, but the $400 we are saving per year by driving a used car could buy a few broken power steering hoses or water pumps. When you consider that we could have bought 12 old Geo Prizms for the price of one new Volkswagen Jetta it’s easy to see how you could save a significant amount of money by driving around used cars.