Posted Monday, Aug 14, 2023
Financial goals are an important part of an individual's future planning because they allow them to tailor their purchase decisions according to where they want to be financially in the years to come. Purchasing a new vehicle can significantly dent your finances, making it difficult to reach your financial goals. This is where used cars come in. Many buyers have resorted to purchasing used cars instead of new vehicles to save money and reach their financial goals quicker. Let's further discuss the financial benefits of buying a used car and how opting for a used car can help you accomplish your financial goals.
How Buying a Used Car Can Assist You in Achieving Your Financial Objectives
Below are the top reasons why buying a used car can help you reach your financial goals:
Save Yourself from Depreciation Losses
The ability to save yourself from bearing depreciation losses is among the top financial benefits of buying a used car. According to Forbes, a new car will lose about 20% of its value the moment you drive it off a dealership's property and approximately 65% after the five-year mark. Therefore, if you purchased a vehicle for around $40,000, you may only receive around $14,000 if you decide to sell it after five years. Therefore, you will suffer a loss of approximately $26,000.
On the other hand, if you purchase a used vehicle, you will have to pay a significantly lower cost, and the previous owner will have borne the depreciation losses. Hence, you can save substantial funds on purchasing a used vehicle. The funds you save can help meet your financial goals, like paying off your mortgage or student debt.
Low Insurance Premiums
New cars come with high monthly insurance expenses, which can become a financial burden and keep you from reaching your financial goals. Since new cars have high price tags and are at a greater risk of theft, insurance companies charge high premiums for them. On the other hand, the insurance premiums for used cars can be significantly lower since used vehicles come at a lower price and are at minimal risk of theft.
When you buy a used car, you are making a smart financial decision that allows you to reduce your initial spending and minimize the monthly expenses linked to your vehicle. If you add up the amount you save monthly from paying low insurance premiums on your used car, you can save substantially. When your financial goals are focused on paying off debt, building a retirement fund, or purchasing your dream home, the financial relief that comes with low insurance premiums can play a pivotal role in allowing you to accomplish these goals.
Low Registration Expenses
Registration expenses can accumulate to a large amount when you add the year-on-year fee you must pay. The average vehicle registration fee in the US is $50 annually. But it may differ from one state to another. For example, the registration fee is $225 in Florida and $46 in California.
Furthermore, in some locations, the registration fee can also vary from vehicle to vehicle, with the charges for older vehicles being cheaper. Therefore, investing in a used car instead of a new one gives you the financial advantage of paying a low registration fee yearly. Although savings on registration fees may seem low, adding the amount you saved after a few years of purchasing your vehicle can add up to a substantial figure. The funds you save on the registration fee can go toward your financial goals.
Minimal Loan Amount
You can purchase both new and used cars on auto financing. However, the monthly loans for new cars can be significantly higher than used cars. These loans can take a large chunk of your monthly earnings, keeping you from achieving your financial objectives. In contrast, the minimal loan amounts associated with used cars can be easily paid over time without exerting financial pressure on you. The funds you save each month can go toward your savings and help you reach your financial goals faster.
Low Sales Tax
Many overlook the advantage of paying a low sales tax when buying a used vehicle. Although this can vary from region to region, the sales tax is usually calculated on the initial purchasing price of a vehicle. Therefore, the higher the vehicle price, the higher the sales tax you will have to pay. Since the prices of used cars can be high, apart from the high cost you will have to pay on the initial purchase, you will also incur high sales tax. This can take a large chunk from your savings and make it challenging to reach your financial goals.
In contrast, the sales tax on used vehicles is lower due to the lower costs of used cars. So compared to the high sales tax you will have to pay on new cars, the sales tax for used vehicles can be minimal. Hence, you can allocate the tax savings from buying a used car toward your financial goals.
With the many financial benefits of buying a used car, including low sales tax, loan amounts, insurance premiums, registration expenses, and depreciation losses, buying a used car is a smart way to reach your goals faster.
If you want to buy a used car, we recommend visiting the Thrive Auto Sales website to browse a large inventory of well-maintained used cars. If you have a specific car in mind, you can also use the car finder feature on their website. They also allow clients to get online price quotes and schedule test drives. Furthermore, the dealership also offers auto financing to their clients regardless of whether they have a good or a bad credit score. If you have any further queries about the dealership, dial (845) 549-3042 to talk to their sales representatives