If you’ve made the decision to purchase a car, one of the first questions that pops into your head is probably whether you should buy a new or used car. While only you can come up with the right answer to your specific scenario, this blog post highlights the advantages and disadvantages to both options in order to help you choose the one that best fits your wants and needs.
Should you buy a new car or go used? Both choices have their pros and cons.
The main advantage to buying a new vehicle is that it comes with no mileage at all, meaning it was only driven from the manufacturer to the dealer’s place at most, so there’s no wear and tear for you to worry about and everything will be perfectly spotless and ready for you to enjoy; on the same hand newer models are usually more fuel efficient and come with the most up-to-date technology on the market, as well as a new car warranty. New cars can be easy to buy as it requires a visit to a dealer, where most of the paperwork will be done for you.
If you’re a peculiar buyer, buying a new car will allow you to get the specific vehicle you want, deciding on everything from the color to its upholstery and technology. Another advantage is the option to enjoy new car deals as automakers frequently offer incentives to help sell slow-moving models or vehicles soon to be replaced with new versions. You may even find some great finance deals for this new car as dealers tend to offer financing at lower interest rates.
The most obvious disadvantage to buying a new car is the higher price tag, as newer vehicles can be more expensive not only to purchase but also to insure and finance, precisely because of their higher value. On top of that, once you buy a new car you’re taxed on the entire price you pay in most states, and consider that once the warranty expires, repairing the high-end technology that comes with them can be quite expensive.
Probably the biggest disadvantage of buying a new car though is the fact that it starts losing its value the minute you drive it out of the dealership, as a new car takes its bigger depreciation hit in the first three years of use. Also, if you’ve decided to buy a brand new model there’s a chance that the manufacturer will switch engines or alters the design in the upcoming year, meaning that the certain model and year you bought could come with more problems than the newly revised and updated model.
Many car buyers choose to buy second hand cars over new ones because of their lower price tag, however, there are many other advantages of picking a previously owned vehicle. The greatest advantage is that you’re letting someone else take the biggest depreciation hit, so you’ll probably be able to sell that car back to somebody else in a few years for nearly the same amount that you paid.
Going for a used car will also save you money with auto insurance and sales tax because of its lower price, and while the interest rate on any financing you take out may be higher, the total amount of interest you’ll be paying over the course of the loan will most likely be lower than the one you would get for a newer vehicle. As used cars are less expensive, you’ll get lower monthly payments and it’ll be easier to fit the purchase into your budget.
Also, as you’ll probably be needing a smaller loan and your used vehicle depreciates slower than a new car does, there’s less risk for you to end up owing more on your car loan than the vehicle is worth. We call this having negative equity or being underwater on your loan, which can be terrible if your car is stolen or is declared a total loss after an accident.
Since a used vehicle is so much cheaper than a new one, you’ll probably have some extra money to spare meaning you can buy a nicer car. As the price of a car is highly dependent on its mileage and conditions, if you’re up to the risk of buying something with higher mile count you could also end up getting much more car for your money.
While not knowing the history of a used vehicle it can be a scary part of buying one, the truth is it’s now easier than ever to find this data with sites such as Carfax.com or Autocheck.com that issue vehicle history reports showing how many owners the vehicle has had, some of the maintenance records and information regarding repairs and collisions.
Before purchasing you can check online and explore to check if there are any problems being faced by current owners of the vehicle you’re intending to buy.
While there are many upsides to buying a used car, take into consideration the cons of it as well, the first one being the fact that you’re buying someone else’s vehicle, and while you should most definitely look up its history and hire a reputable and knowledgeable mechanic to do a pre-purchase inspection in order to make sure you don’t end up buying a car with problems that you can’t detect or that may not be evident to you.
When you purchase a pre-owned vehicle, once you drive away with the car the seller is released from any problems you may face with it, as second hand vehicles typically don’t come with warranties, so you’ll have to pay out-of-pocket for any repairs
Also, when buying a second hand vehicle, don’t get to be too picky, meaning you’ll probably have to conform with the best you’re able to find instead of the exact model, mileage, conditions or specifications. When shopping for a used car, you’ll need to be more flexible, patient and dig deeper for the right deal to fit your needs.
Used vehicles sometimes require higher-priced financing as well, as lenders consider it a riskier purchase than a new one, charging higher interest rates.
Whichever you decide to go for, research is a must before making such a big investment. By going through this list of pros and cons you already have a pretty good idea of what you’re in for, however, make sure to have your finances in check as well and only purchase a car you’re able to afford, either by paying cash in full upfront or getting finance that can be paid off in no more than three years time.
Make sure to look around for the best deals available for everything from financing to insurance and the cost of the vehicle itself. Whichever option you decide to go for, just make sure to take the time to look up every detail so that you don’t find yourself losing money in the long run.