If you do decide to get a ‘new to you’ used car, then you are making considerable savings on the price of a new one. Most of the depreciation will have been experienced by the previous owner and you get to avoid all of that. Now that you have the car, the depreciation begins to slow down quite dramatically, and if you take care of your car and make sure that it gets the necessary maintenance, then there is no reason why you shouldn’t get back all of your money or close to it, when you decide to sell your car later. However, should you decide to use financing to purchase your used car, then you may find that you end up paying a lot more than you bargained for.
You Might Pay More.
If you look at used cars in Canberra that are offered on a payment plan, the dealer that you’re buying from, can probably offer you a fairly decent financing plan, or you can decide to borrow the money from a different lending institution. Either way, you can expect to pay a lot more than the sticker price that is displayed on the windscreen of the car. It is very easy to buy a second-hand car nowadays because a lot of dealers require a very small down payment in order for you to start the financing procedure. This is great initially, but over the course of the term of the loan, you may find that you’re paying out a lot more money than the price that you agreed on the day.
Some car loans can go as high as almost 8 percent in Australia, and although the payment each month seems quite insignificant, over the long term of 5 to 6 years, this can amount to many thousands of dollars extra money that you have paid. In a large number of cases, it would have been much cheaper if had bought a new car, but you have settled for a used, because you didn’t factor in all of the financing costs. If you buy a used car for cash, then you get to choose what kind of insurance policy you would like to have on your vehicle. If you feel that you can cover the costs of fixing your own car, then you can take out a policy that only covers damage to the car that you hit. You can make significant savings this way.
Was It The Right Decision?
However, if you take out a financing loan to pay for your car, then you must have a policy that covers all eventualities in the event of an accident. This means that you will have to pay an increased insurance premium for the duration of the loan until it is paid in full. This is another additional cost that you may not have factored into the final price. When you consider that extra $50 a month over the period of the financing loan, it amounts to a significant amount of money, that you could have otherwise have saved, and then walked into the car dealers and paid for your car in full.