We all know that a new vehicle starts to lose value the second you drive it off the dealer’s lot, but what you may not realize is that some types of cars lose a lot more value than others in the first year — which means you definitely want to buy those models used.
Read more: These are the top 10 cars to buy new
Need a new car? Buy these car models slightly used!
A just-released study by iSeeCars.com found large price differences between some new and one-year-old used car models.
“Most people know new cars depreciate the most in the first year and that different cars have different depreciation rates, but we wanted to determine which used cars experienced the largest price drops compared to their new models,” said Phong Ly, iSeeCars.com CEO.
This study analyzed more than 14 million new and used cars sold from August 2015 through July 2016.
The average price difference between a new car and a one-year-old used car was 21%, according to the study. But 12 models had price differences between 31% and 34%, making them a better value if purchased slightly used.
Notice in the graphic below that you could save between $6,000 and $20,000 by buying a one-year-old used car.
You may have also noticed that many of the vehicles on the list aren’t exactly the most popular models, which helps explain the large price differences.
‘Eight of the cars on the list are models that are significantly less popular than their competitors, plus they are in segments that have seen a decline in new car sales lately,’ said Ly. ‘For example, the compact luxury segment has seen an overall decline, but the Volvo S60, which was not a strong seller to begin with, has been hit harder than competitors such as the BMW 3 Series or the Audi A4.”
As for Fiat and Chrysler, they’ve had dependability issues, which makes them less desirable to consumers.
But as a general rule of thumb, unless you plan to drive a new car until it falls apart, buying used is a better deal!
Avoid the #1 mistake that car buyers make
It doesn’t matter whether you’re buying a new vehicle or a used one, we want you to avoid a very common mistake that car buyers make.
That mistake? Not arranging financing before you head to the dealership.
Do yourself a favor and go to your credit union, online bank or even a traditional bank to pre-qualify for a car loan before you get to the lot. Credit unions offer interest rates on car loans that can be 2.5% lower than other lenders.
If the car dealership is able to beat the rate you’ve prequalified for, by all means give them a chance to make some money when they originate the loan.
But don’t let them make money by gouging you on the markup of a loan!