Deciding how much to spend on your next car can be hard. Whether your budget is large or small, there are always trade-offs.

One major decision you must make is whether to buy used or new. In this article, we'll make the case that it's often better to buy used—partly because it frees up more funds to travel.

When you consider the amount you can save on the car price, fees, insurance, and depreciation, buying used can make a lot of sense.

Let's dive deeper into the reasons to buy a car used:

1. Slower depreciation

It's no secret that cars are a depreciating asset. A new car starts to lose value as soon as you drive it off the lot. According to LendingTree, new cars generally depreciate by about 20% in their first year. After five years, they depreciate by 40%.

That means if you buy a new car for $20,000, you can probably only expect to sell it for about $12,000 after five years.

Used cars depreciate, too, but at a slower rate. So it pays to buy a car that's a few years old and past the steepest depreciation dip.

2. Lower insurance costs

Car insurance rates can vary based on your age, driving history, credit score, and location. They're also affected by the underlying car, its mileage, condition, and assessed value. If the car is worth more, it'll cost more to insure. If it's worth less, it'll cost less to insure.

As a result, buying a used car generally lowers your insurance premium. Of course, you'll still want to shop around and compare rates to get the best offer.

3. Lower dealership fees

Most dealership fees for car sales are based on a percentage of the car price. So if the overall price is lower, your transaction fees will be lower. The same goes for sales tax.

4. Used car dealerships offer many of the same benefits of buying new

Many think that buying a used car means buying from a private seller and not knowing for sure what condition the car is in. However, if you buy from a used car dealership, you can get many of the same benefits of buying new: warranties, inspections, reports, and more.

According to Tiger Okeley at used car dealership Oak Motors, “Each of our vehicles goes through a thorough inspection process so that we can certify its condition. There's no upside for a dealership like ours in acquiring a used car that looks like it's going to be trouble in the near future.  At best, it damages the relationship with our client and makes it unlikely they'll buy from us again…at worst, all of the above PLUS we'll have to come up with some money to help fix the car.”

5. More bang for your buck

Finally, buying a used car helps stretch your money further. Instead of paying a premium for a new car, you can cash the extra savings from buying a used car to put toward gas and accommodations on your next vacation.

That way, you can make the most of your money and spend it on the things that matter, like travel and positive experiences with friends and family. There's no point in having a nice car if you're left with no money to drive it very far.

Getting started with buying a used car

The choice to buy a used car is up to you. But if you do buy one, make sure to shop around for the best car model, car loan, and dealership.

Many used car dealerships can point you in the right direction and help you narrow down your choice based on your budget, preferences, and financing needs. That way, you can have peace of mind about having made the right choice.