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What makes a used car a good investment plan?

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Buying a used car provides a perfect opportunity to own a luxury brand at a fraction of the cost. Buying used also minimizes business losses and and tax expenditures, claims Auction Export.

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What makes a used car a good investment plan?
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Full Answer

Auction Export goes ahead to explain how it is possible to enjoy the benefits that come with owning a luxury car by getting a used one cheaply. For instance, a used Mercedes-Benz costs a fraction of what one would normally pay for a new one.

The value of a new car drops significantly the moment the car leaves the lot, states BizFilings. This drop means the rate of depreciation for a new car is high, which can contribute to business losses. On the other hand, a used car does not register such a high level of depreciation.

Registration fees and taxes are higher for new cars than used cars, declares Money Crashers. States determine the rate of the annual registration fee for a vehicle depending on the value and model of the car. This rate is highest during the first three years, leveling off after five years; therefore, buying a used car eliminates registration fees. State laws require a buyer to pay state sales tax on new cars, but not used ones. This tax runs into thousands of dollars. Avoiding this tax saves the business money every year.

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