Buying a used car can be a wise investment at the start of your career, but a used car can enable you to save for retirement too (a third of Americans haven’t saved at all). In fact, you can save thousands of dollars by purchasing a pre-owned car. This money can go towards retirement savings, so you don’t rely solely on Social Security income, pension plans, and other limited income streams.
These days, cars are built to last, so you don’t always break the bank repairing a used car. And, many used cars are just two or three years old. Contrary to popular belief, new cars can cause you to lose money. With a used car, you avoid this problem due to:
- Depreciation: You do not build wealth by purchasing a new car. In fact, the vehicle depreciates by thousands of dollars when you drive off the lot. That means it’s worth much less in value than it was minutes ago. During its first year, a car can lose over $7,000 in value, according to Edmunds. But you must still make payments on time, which reflect the vehicle’s original cost—meaning less cash for retirement.
- Less to Invest: If you keep buying new cars, you’ll continue taking out loans with higher payments. These add up over the years. Imagine if you invest in a used car and put an extra few hundred dollars a month into a retirement account. If you earn just a few percentage points on it, you could eventually have over $200,000 put away.
- Car Insurance/Plates: New cars come with all sorts of fees, including new license plates. Also, car insurance is often higher for new vehicles (with added collision and comprehensive coverage), while repairing a new car is often more costly.
Buying a used car avoids extra insurance costs and gets you into a lower-cost vehicle. Your monthly payments can be lower while you get a vehicle that can include more advanced features and performance for a better price. At the same time, you can save the money you would have spent and put it into a retirement savings account.
Also, you can save even more money by paying cash for the vehicle. That means you don’t pay interest for a car that’s continuously depreciating in value. For added savings, purchase a car that is known to last, rather than focus on the latest technologies and gadgets. A flashy sports car looks nice, but probably doesn’t truly represent your value. Realizing this can help you make the right decision and purchase a vehicle that can save you lots of money for later.
And, no matter what kind of car you get, stick to a regular maintenance plan. Regular oil changes, fluid checks, tire rotations, and more can keep your vehicle in top condition for much longer. For example, a simple oil change can keep dirt and other contaminants out of the engine. This can prevent or delay wear and tear that can shorten the life of the vehicle, and not to mention lead to expensive repairs.
Visit Hawthorne’s Premier Pre-Owned Car Dealership
CarWorld offers hundreds of low-mileage pre-owned vehicles that have been carefully inspected before being moved to our lot. Find a used Honda, Ford, Toyota, Chrysler, or Mercedes-Benz and get more for your money while helping save for retirement! To learn more, value a trade-in or apply for financing online, visit our dealership to view our inventory in-person, or speak to a representative at 833-219-9951.