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Buying a used car is only for poor people. Or people who don’t have a lot of money. Or people who can’t afford a brand new car.
Buying a used car comes with loads of judgement.
The constant struggle to justify why it is you decided on buying something used instead of new, while reassuring everyone (and saving face) that you could afford a new car but chose to buy used.
Yeah, people will judge.
Because in today’s world, buying anything used puts a label on you that you can’t afford any other option.
I’m here to tell you “No”.
This mindset is so wrong on so many levels.
But, one thing completely changed my perspective.
I read a book called The Millionaire Next Door and it changed everything.
It was truly my a-ha moment and I could never unhear what I heard (it was an audiobook, haha).
You’re telling me that millionaires….like rich people….buy used cars? Look for deals? Jump at the bargains?
This part of the book had me all confused. For so long, I had the impression that rich people ALWAYS bought the expensive things, and always upgraded to keep their wealthy status.
I mean, haven’t we all been taught that you work hard to make a lot of money to afford all the luxuries in life?
We totally eat up that lie. That lie that we’ve convinced ourselves to believe has directly correlated with the staggering amount of people that are currently in debt.
According to ConsumerDebt.org, 87% of American families, ages of 36 and 44, are currently in debt.
And even though we’ve heard these statistics being thrown around and raise an eyebrow in surprise, we still opt to believe in the notion that buying used is beneath us.
But, the truth is, buying used instead of new is one of the best things you can do to get the most out of your money.
In fact, in the book I mentioned earlier, they illustrate throughout the book that the rich fervently save money, while still buying quality.
They unashamedly purchase that 3 year old used Mercedes Benz that was dropped off by that poor soul who decides to upgrade their car to stay “on top” the game.
I dare say that perhaps they wait eagerly for that oblivious consumer who decides to part with their awesome car too early.
And now that rich smarty pants gets to reap all the benefits of a newer car without all the depreciation that comes with it.
5 Top Reasons to Buy a Used Car- Especially when You’re Rich
1- You Save on Upfront Costs
Buying a three year old used car will save you literally thousands of dollars.
My mom just purchased a used 2016 Toyota Corolla for $10,900 in perfect condition and with less than 30,000 miles on it. Did I mention that this included tax and license fees?
Meanwhile, a new 2019 Toyota Corolla MSRP is $18,700, without any bells and whistles and without tax and license fees.
Let’s say tax and licensing fees cost another $1,500. Your bill is now at $20,000 if you buy new.
But, wait! There’s more…cost that is!
You’re probably going to finance the new car, right?
Let’s say you have stellar credit and get 2.4% APR that is currently being promoted in June 2019.
Based on this calculator, you’ll pay a total $21,240 for your 2019 Toyota Corolla.
The bad part is…a Corolla is viewed as a starter car or economical car.
Want more status? That price goes up exponentially.
Let’s go back and look at the used car my mom purchased.
She saved a whopping $10,340 and got a 3 year old mint-condition car. She also saved and paid for it outright with cash, saving over a thousand dollars in interest.
How about them apples….or Corollas, or…..whatever, you know what I mean.
2- Insurance is cheaper
Buying an older car reduces your insurance premiums. Insuring a brand new car, especially financed, requires that you purchase full coverage insurance.
Meanwhile, purchasing a 3 year old car (and paying in full) means you have the option of purchasing full coverage or just liability insurance.
Even with purchasing full coverage, a 3-year old car is not going to cost as much as a brand new car.
An older car holds less value (due to depreciation), so it costs less to insure, in general.
Of course, you’ll need to check your insurance rates in your city and state to do an exact comparison.
3- Car body style generally change every few years
If you’re looking to purchase a new car because you like the overall look and body of the vehicle, keep in mind that model styles stays generally the same for a few consecutive years.
4- No one will know you bought used
Buying a beautiful car is something to be proud of. But, buying a used beautiful car is often paired with a bit of anxiety that somehow you’ll look cheap for buying a “hand-me-down”.
On the contrary, buying a used car means you get to save money while also enjoying a beautiful (newer) ride.
And if you’re worried about others noticing that you bought used, most people are not car experts and won’t be able to see the subtleties between a brand-new current year model and a model that is a few years younger.
Remember, buying a car is an experience you should enjoy, and it should have no dependence on what others think.
It’s your opinion that matters.
5- You’ll free up money to invest
According to an article from CNBC, 1 in 3 of Americans have less than $5,000 saved for retirement.
Perhaps it’s because their money is tied up in car loans and other depreciating assets.
Just a guess.
But, just think of how much money you’d have to save and invest with if you bought a used instead of new?
Buying used means you’re spending a lot less money, so you’ll be able to afford investing more money each month and growing your wealth over time.
So, you get a nice newer car AND have money growing in the bank.
Sounds like a win-win to me!