Is it time for a new or new-to-you car? If you’re struggling with whether to buy a shiny new set of wheels or a pre-owned vehicle, there are some straightforward facts that can help you decide. There is no one-size-fits-all solution, but once you determine what’s most important to you, the answer can become clear.
Pros of Buying a New Car
- A new car will cost you less to operate and maintain during the first few years of ownership because the car is brand new and there’s usually a warranty to cover any major repair that might be needed. You’ll also enjoy the latest technology features, ensuring safety, comfort, and convenience.
- Another selling point: dealer incentives on certain models can greatly reduce your purchase price and/or make your monthly payment more affordable – which is great if you don’t have a large down payment or trade-in equity on your current car.
- One of the best things about buying a new car is the peace of mind it provides. A new car should, in theory, be more reliable and need much less maintenance than a used car. Not to mention, that new car smell is a delightful bonus, even if it doesn’t last long.
Cons of Buying a New Car
- No matter how good you are at negotiating your purchase price, or how long your warranty lasts on major repairs, you’ll always spend more (sometimes a few thousand dollars, sometimes much more) on a brand new car.
- On average, a new car loses between 20 and 30 percent of its value as soon as you drive off the lot. Some cars can depreciate up to 50 percent in the first three years. For example, if you paid $30,000 for a brand new car, after three years, it might be worth just $15,000. If you wanted to sell at that point, you might be upside down on your loan if you did 5- or 6-year financing with a very small down payment.
Pros of Buying a Used Car
- If your greatest concern is affordability, buying used is your best bet. A 1-, 2- or 3-year-old model is far less expensive than the brand new version. And while you might forgo the latest technological or “creature-comfort” features, if the body style is the same, you get the car you want for far less money. What’s more, you let the original owner take the bulk of the initial depreciation – so depending on how you finance the vehicle, you’ll likely never be upside down on your loan.
- Other bonuses of buying used? Pre-owned cars are less expensive to insure, registry renewals are cheaper, and if the type of car you want matters, you can purchase a higher class of car for the same amount you would pay for a new, less-luxurious model.
Cons of Buying a Used Car
- When you buy a used car, you never truly know how the car was treated by the previous owner. While you should get a vehicle history report and a thorough inspection before you buy used, some issues may still go unseen. In addition, even if the car was treated perfectly, and there are no major issues, you’re buying a car that already has wear and tear, which means repairs will be needed sooner than if you’d bought the car brand new. You can expect to spend more on maintenance with a used car, but still likely much less overall than you’d spend to purchase a brand new vehicle.
What’s Right for You?
You have all the facts, now it’s time to decide. Do you value the peace of mind and the latest features that come with a new car? Or is saving money over the long haul the most important thing to you? Whatever you ultimately choose, the best car purchase is one where you make an informed decision.
Start your search by researching car prices and determining the value of your trade-in (if you have one). Next, get pre-approved for an auto loan so you know upfront how much you can spend on the purchase price of the car. Then, plug in your approved rate, down payment, and desired term into an auto financing calculator to help you determine what your monthly payment will be. You can play around with the numbers until you get them just right. Happy car shopping!