The benefits of buying a preowned vehicle

According to Kelley Blue Book, the average cost of a new car rose by more than $10,000 between 2019 and 2023, when drivers could expect to spend an average of $47,899 for a new vehicle.

The rising cost of new vehicles may have priced many people out of the new car market. The preowned vehicle market has changed considerably over the last decade-plus, so it’s worth considering the many benefits of such automobiles when the time comes to replace an existing car or truck.

Less sticker shock: Cost is perhaps the most significant difference between preowned and new vehicles. Not unlike new vehicles, the price of a preowned car will depend on the category of automobile. However, Carfax¨ reported that prices for preowned vehicles were declining considerably by the end of 2023. By late November of that year, the average cost of a preowned SUV was $24,854, while the average price of a preowned car was less than $20,000. Those prices are a far cry from the cost of a new car as determined by KBB, making preowned vehicles a more budget-friendly option at a point in time when cost of living remains high.

Less depreciation: Most drivers are familiar with the notion that the value of new cars drops considerably the moment the car is driven off a dealership lot. In fact, the auto insurance experts at Progressive estimate that many cars lose up to 20 percent of their value within the first year and an additional 15 percent more each year until the four- or fiveyear mark. Many preowned vehicles are purchased after the period when their value is dropping considerably each year, which makes some used cars a better investment than a new automobile.

Lower insurance premiums: Another budget-friendly benefit of buying preowned is that such cars and trucks tend to cost a lot less to insure than new vehicles. Cars cost less to insure as their value goes down, as Progressive notes they tend to be cheaper to repair or replace. The vehicle make and model and how the car is used will determine the cost to insure it, but some estimates suggest preowned vehicles can cost as much as 25 percent less to insure than new cars or trucks.

An altered preowned landscape: Used cars declined in popularity as drivers feared being swindled with a lemon. However, the availability of vehicle history reports through firms like Carfax¨ and the rise in certified preowned vehicles has removed much of the risk once associated with buying used cars. Certified preowned programs vary among manufacturers, but most automakers have established standards that ensure vehicles carrying the CPO designation are safe and reliable. The CPO designation is similar, though not exactly the same, as a new vehicle warranty, which can calm drivers’ fears about buying used cars.

Preowned vehicles are worth considering when drivers look to replace their existing cars or trucks.