Many times, used car prices are affected by the mileage and potential mileage deduction found on the vehicle. With the economic hardships facing several people, a car payment is a scary financial burden. If it is time to buy a new car, used can be a cost efficient way. This allows for spending within a specific budget and possibly paying for it outright, without the use of a loan. Money is saved on interest and no worries on fitting in another payment.
Mileage Affects Prices
Used car prices tend to be lower when there is high mileage on a vehicle, regardless of the year of the vehicle. Generally, an older car with less mileage will be more expensive than a car two years old with 100,000 miles on it. There are other factors, including condition of the overall vehicle, but mileage is vital. Many people looking to buy a used car look at mileage in comparison to the price offered.
Used vs. New
For people who use their vehicle for work purposes and travel frequently, used cars are a great choice. Both new and used cars depreciate as soon as they leave the lot. Placing a lot of wear and tear as well as mileage on the car will lower the value quicker. If they look to trade it in for a newer car, a used car will get them more than a new car with high mileage.
People who use their cars for work purposes have another added benefit with used cars and mileage deduction. This comes with tax time. Mileage becomes a deduction that can be used when filling taxes. In 2009, the rate was 55 cents per mile for business travel. If an employee drove 10,000 miles in a year, $1000 gets saved in taxes. Constant traveling can be a positive, though racking up mileage is the negative.
Medical or Moving Mileage Deduction
There are deductions also available for medical purposes or moving. The rate in 2009 was lower at 24 cents per mile, but it was a money saver. This year in 2010, the IRS is lowering the mileage deduction. Business is going to 50 cents per mile and moving or medical down to 16.5 cents per mile. This is showing concern from the people who utilize this deduction. Now, money may be owed to the IRS because their mileage is not increasing.
Since the IRS allows for mileage deduction, there are other car related expenses which are not allowed to be used. Any car expenses racked up within the year; whether it is major repairs or routine maintenance, depreciation, gasoline used, insurance payments or lease payments cannot be deducted. The deduction is allowed regardless of whether the company reimburses for mileage or not. Mileage deduction still is beneficial for business professionals who “live” out of their car. And with all the traveling done, purchasing a used car can save money too.