Buying a Used Car Could Save You Some Bucks

If you’ve been thinking about buying a car, but the prices for new cars are too high for your budget, don’t worry. Buying used cars in montclair could save you some bucks. There are many benefits to buying a used vehicle. Of course, there are also some disadvantages to purchasing a used vehicle. We’ve compiled the pros and cons of buying a used car here so that you can make an informed decision before taking the plunge.

Buying a used car can save you money

One of the biggest benefits of purchasing a used car is that it could save you some big bucks. A new vehicle depreciates as soon as it is driven off the lot, and keeps declining in value until it hits what’s called ‘residual’ value. Residual value is basically the projected resale price of the vehicle after three years, when the manufacturer’s warranty has run out. New cars lose an average of 15 per cent of their resale value after the first year alone. Still, if you are in a position to hold onto a vehicle for three years or more, and find an optimal price for a used vehicle, it could save you quite some money.

Tax deduction on purchased vehicles

When buying your used car, you can also claim tax benefits on the purchase – it’s what we call “tax free.” This can save you some $500 to $2,000 extra each year in tax payments. For example: If the buyer of your car sells it within five years and they make a profit of more than $500 (after all expenses), they must pay the federal government $500 in taxes. If the buyer makes a loss, they can write it off on their tax form. This can save buyers a lot of money in taxes.

Lower auto insurance costs

If you are looking to save some money on your car insurance, then buying a used car could give you a few extra dollars every year. The value of your car is calculated in the same way by all insurance companies. Although it varies among companies, the range of values that’s used to calculate liability coverage is typically between $10,000 and $20,000 (based on age and other factors). After all expenses have been deducted – such as taxes – insurers use that figure to calculate liability coverage limits (the amount paid out to others in an accident). Insurance companies calculate risk according to the likelihood of paying in claims. So if you’re an older driver and drive a reasonably new vehicle, you might have to pay a little more. If you’re younger, you might have to pay less. But the median buying a used car will save on car insurance is $500 annually per car.