What’s the Best Age for a Used Car?
Buying a used car has clear advantages over buying new, like saving thousands of dollars. Of course, how much money you can actually save depends on a variety of factors like: age, brand or service needs.
But is there a “sweet spot” when it comes to the age of the used car you buy? Let’s explore this topic further.
Beating the Depreciation Race
Depreciation rates are different for new and used cars. The good news is, pre-owned cars are on the positive side of the curve.
New cars are notorious for how quickly they depreciate, with a new car losing up to 20% of its value within the first 12 months. After this, a vehicle loses approximately 15 to 25% of its value per year for five years, with that rate tapering down over time.
What’s the “Sweet Spot” for Used Car Age?
In retaining “like new” quality and inheriting a slower depreciation rate, the best used car age for buying is 2-3 years. In fact, Americans are saving up to $14,000 on a 3-year-old vehicle.
For example, a car that may have cost you $30,000 when new would cost around $16,000 after just 3 years.
A great way to find cars like this is by exploring certified pre-owned programs. Most major auto manufacturers have CPO programs where age, mileage and other quality standards are required for certification. These programs typically come with extended warranties and other perks, so that you’re not only saving money but you’re also getting many benefits that you’d get with a new car purchase.
What Affects Depreciation?
Age isn’t the only thing that affects depreciation. Luxury vehicles have high depreciation rates because buyers in this market are more likely to always want the newest model.
Vehicles that are known for their reliability depreciate the slowest. Brands like Honda, Toyota and Mazda are some of the most reliable on the market, so you could see major savings when you buy used cars of these makes.
For vehicles that experienced recalls or poor reliability, these will depreciate the fastest. With more repairs needed over time, these kinds of used vehicles may off-set or exceed any initial savings when purchased.
This is why it’s important to thoroughly research the models you’re interested in, so that you’re making the best decision that will save you money over the life of your vehicle.
It takes research, careful calculations, and determination to get the best quality pre-owned car for the least money. But keeping in mind that sweet spot of 2-3 years and exploring Certified Pre-Owned programs makes this process much easier. Keep our guidelines in mind and you’re sure to find the best used car at the best price!