Next to purchasing a home, a vehicle purchase is the biggest financial purchase that most people will make. Like all major decisions, buying a car comes with a host of potential challenges and questions that you must consider. At the top of that list, you must decide whether to purchase a new or used vehicle.
Since we know a thing or two about car buying, our recommendation is that you buy a used car. However, since this is a nuanced process, this guide is designed to detail the pros and cons regarding the purchase of a new car versus an old car.
There are some noteworthy advantages to purchasing a new car. If you're buying a brand new car from a dealership, the vehicle will likely have a warranty. New cars usually only need general routine maintenance since they are unlikely to need repairs for the first five years.
New cars are usually eligible for lower interest rates when financing with the dealer, meaning that you'll get a reduction in the interest paid over the life of the new car loan. New cars are also equipped with the latest technology. This means that navigation, smartphone interactivity, increased fuel efficiency, improved emissions, and any other new safety features will be available to you.
The number one disadvantage of purchasing a new car is depreciation. New cars depreciate in value the moment they leave the car lot. Over the first three years, an average new car sees its most significant depreciation.
With new vehicles, you are also at risk of purchasing a car during the first year when there have been design alterations that affect the performance or safety features of that particular model. Even just changing the engine in a new model can cause performance issues that are not seen right away.
The biggest benefit to buying an old car is the fact that you're able to save thousands of dollars (and have peace of mind) on the lost value imposed by the depreciation of a new car. This means that you can buy a used car and sell it several years later with very little change in value. Since used cars have been driven long enough to see how they perform, buyers can see which vehicles are looked upon favorably by Consumer Reports.
Additionally, these days, the car buying process is much easier. You can find a used car in your area using the internet. When purchasing a used car, you are also able to benefit from good financing options in many cases. Purchasing a used vehicle saves on tax, car insurance, and registration costs as well. Additionally, it's much easier to save up and purchase a used car completely with cash and avoid the monthly car payment.
One major disadvantage of purchasing a new car is that they sometimes need repairs. While new cars currently maintain well without the need for major repairs (this includes keeping up on oil changes), reliability is a serious factor to consider when making your used car purchase. You can use the vehicle’s VIN to get a Carfax history report and see the vehicle history of the car.
Another disadvantage to used purchases is that if there is a particular color vehicle that you are looking for, the color may not be available in the late-model that you are considering.
Bottom line: every car owner has their individual needs and wants to consider when making a car purchase. Be upfront to yourself and the dealer about your needs and keep them in mind throughout the process. Clearly state the specific features that you are looking for. Don't let anyone convince you to give up necessary tech, or overpay for features that aren't.
Leading up to your vehicle purchase, there are some other things that you will need to factor in. Identifying your budget is the first thing you should do when pondering on buying a car. Keep track of your preferred down payment, monthly payment, maintenance costs, extended warranty, and any additional auto insurance considerations (like roadside assistance) that you may want. Use Kelley Blue Book to determine the best price you should pay at the car dealership. Consider your credit score; creditworthiness is the factor that determines the type of interest rate on the auto loan you will get from your lender.
Everyone has their own preferences and needs to consider when purchasing a vehicle. Being as specific as possible about what you want and need is crucial to finding the ideal next car for you, even if that doesn't mean getting to enjoy the new car smell. Take into stock the pros and cons of purchasing a used vehicle and make the choice that is right for your situation and finances.
Tim Setterfield focuses on various automotive topics from products to luxury vehicles. His inspiration to write about the automotive industry stems from working with his dad when he was a kid in his garage. He is currently looking to expand his collaboration and is open to new opportunities.