10 Items You Should Buy Used (Besides Cars and Houses)
Today we’re going to look at an under-utilized, but hugely advantageous dollar-stretching opportunity – buying used instead of new.
When you buy a new car, it loses 10% of its value the first mile you drive it off the lot. A year later, it’s gone down 20%.
“New” has a value, so the first step to successfully buying used is to subtract the “cost of new.”
3 Rules for Buying Used
Rule #1: Start in a range from 25-50% off the original retail price.
Exceptions include items that vary (or increase) in value, such as real estate, and items that hold their value, like guns or collectables. If you know absolutely nothing about an item that is in otherwise good condition, dropping the price by 50% is a good benchmark.
Rule #2: Depreciate the item – if you can.
This requires a bit more information, since you need to know the average lifespan of the product. For cars, age and mileage figure into the mix, while other items, depreciation is based solely on useful lifespan.
Rule #3: See what the market says.
Shop around and see what other buyers and sellers are willing to accept in the secondhand market.
Make the Deal
Once you have your “trigger price,” start looking for ways to make a good deal.
I say “make” because when buying used, prices are not firmly fixed. Haggling is the norm. The worst that can happen when negotiating a price is the seller says no.
But there’s more.
Look for low-cost ways to improve the deal for the seller.
Will they take less if you pay cash?
What if you arrange shipping?
Can you offer something to trade to sweeten the deal?
Sometimes, just being ready to deal right away – “I can be there in twenty minutes with the cash” – will get you a nice discount.
Part of making the deal is avoiding scams.
Online, always use a protected payment service or escrow.
Offline, make sure you inspect the item fully before you hand over the money. That means checking it works. Flaws might not kill the deal, but uncovering last-minute defects can give you leverage to get additional savings.
Top Ten Items to Buy Used (Besides Cars and Houses)
The price difference between new and used for these items makes it almost foolish to buy new. These are listed by category and typical savings.
#10 Item to Buy Used
Lawn care equipment
No fixed savings here, but look for a shop that repairs and resells used “small-motor” equipment. Lawnmowers, chainsaws, small tractors and other items will come with a guarantee of serviceability at a substantial discount. Even if you purchase from a private seller, a repair shop may be your next stop for a tune-up or supplies.
#9 Item to Buy Used
Savings: 50-90%. This includes video games and programs. Here it’s worth dealing with a reputable seller (and paying more) because illegal or unlicensed software is fairly common.
#8 Item to Buy Used
Savings: 75-90%. Maternity clothing and baby/toddler clothing has a high turnover of “gently used” items. A few hours at yard sales or secondhand shops can generate a year’s wardrobe.
#7 Item to Buy Used
Savings: 25-90%. Text books especially, but used books in general fall quickly in price.
#6 Item to Buy Used
Savings: 25-50%. Stay away from collectables, but pay attention to brand and quality. Best buys here are from private, informal sellers instead of pawn shops or resellers.
#5 Item to Buy Used
25-75%. Buy brand names. Parts, extended warranties, and user manuals will be available online from the manufacturer. Cosmetic damage yield the best deals typically.
#4 Item to Buy Used
Savings: 50-75%. Transportation is an issue here, so buy locally.
#3 Item to Buy Used
Savings: 50-75%, depending on condition. The best deals come with brand names and higher priced items. At these savings, you can even add the cost of minor repairs and still come out ahead.
#2 Item to Buy Used
Savings: 25-50%. Computers and smartphones top the list. If you’re not tech-savvy, bring a friend who is or buy refurbished from a reputable company (with warranty) vs. shopping the private market.
#1 Item to Buy Used
Savings: 50-75%. You’ll definitely need payment protection and have to add in the cost of an appraisal before you buy.
To a Rich Life,
Editor, Rich Life Roadmap