Should you buy a new or used car?

Deciding Whether to Buy a New or Used Car

It can be tempting to think about purchasing a brand-new car. There’s the low miles and the new-car smell, but is a used car a better value in the long run? There are pros and cons to each, which might help you decide when you’re looking for a vehicle.

Buying a New Car

Driving a new car off the lot might make you feel amazing: You know that everything works perfectly and there are no lingering issues that may not have been disclosed by the previous owner. A new car is a status symbol for many and has curb appeal to spare. Consider the pros and cons of purchasing one before you decide if it’s the right choice for you.

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New Car Pros

A new car is guaranteed to have a flawless paint job and low miles, but there are other advantages:

• Features. New cars come with the latest safety features, fuel-efficiency standards, and features meant to enhance the comfort of the driver and passengers. This can be a very attractive selling point for a lot of people, especially those who spend a lot of time on the road.
• Reliability and warranty. Most new cars have good reliability records. Since they have such minimal wear and tear, they’re less likely to break down. But if something does go wrong, a new car is usually covered by a manufacturer’s warranty, so you won’t be on the hook to pay for any repairs.
• Financing deals. If you have good credit score, carmakers and dealers can offer financing programs with little or no interest. This can make it a better deal to finance a new car than a used one.
• Roadside assistance. Many new cars come with free roadside assistance, which can save you hundreds if you need a tow.

Also, if leasing a car is an attractive option for you, you’ll be looking exclusively at new cars.

Disadvantages of Buying a New Car

All the new-car smell in the world can’t cancel out the fact that there are disadvantages to buying a new car.

• Depreciation. The moment you drive a new car off the dealer’s lot, it begins to lose its value. New cars depreciate at a faster rate than used cars and may lose most of its value within the first few years of ownership. This is because you’re paying the full retail price, and the car will never be worth that again, even if you turn around and sell it immediately. As soon as you sign the forms and drive away from the dealer, the car is only worth its wholesale price.
• More expensive insurance. New cars have higher auto insurance costs than used cars. This is because it will cost more to replace a brand-new car in the event of an accident.
• Expensive upfront. Buying a new car can be costly. Before you commit to a down payment and a hefty monthly fee—which can be sizeable even if the dealer offers interest-free financing—you may need to redo your monthly budget to make sure you’re not spending more than you can afford.

Another point to remember is that even if you buy a brand-new car is that it won’t always be new. The paint will get scratched, weather will take a toll, and something will inevitably spill all over your seats.

Buying a Used Car

Used cars may have gotten a bad reputation over the years, thanks to dishonest salespeople not disclosing known issues. To ameliorate some of this lingering reputation trouble, the industry-preferred term for these vehicles has become “pre-owned,” and savvy car shoppers can find some incredible cars.

Advantages of Buying a Used Car

A used car is a solid choice for those in the market for a new car who don’t want to pay the full retail price.

• Price. A used car has already depreciated, but you can still get a great car for a very reasonable amount of money. Additionally, the rate of depreciation will be slower for owners of used cars. If a new car is automatically worth 20% less after you drive it off the lot, why not buy a nearly new car and save some money on a monthly payment?
• Warranties. Many used cars come with warranties that cover their most expensive components for up to 200,000 miles. If you’re looking at a car that’s considered “certified pre-owned,” then it’s been thoroughly inspected and almost certainly contains a warranty. However, if you’re handy with cars and don’t mind handling maintenance yourself, then you might feel comfortable looking at a car that might need additional work.
• Cheaper insurance. If a used car is in an accident and needs to be replaced outright, it will be less costly for an insurance company to do so, which is why insurance rates for used cars are lower.

Cons of Buying a Used Car

While there is less stigma surrounding pre-owned vehicles, there are a few risks associated with them.

• Mileage. High mileage can reduce the lifespan of a vehicle. While you may be lucky and find a used car with less than 20,000 miles, other who purchase pre-owned cars with higher mileage may need to replace their cars sooner than later.
• Consumer protection. Lemon laws are in place to protect consumers from vehicles that fail to meet standards, but they typically only apply to cars with a certain number of miles. Vehicles with above a certain age or higher mileage may not be protected.
• Availability. If you’ve committed to purchasing a used car, you’re limited to what cars are available at your local dealership. While there are some car-buying services that will ship from other locations, you may still be limited in terms of selection, especially if you have a laundry list of must-have qualities for your new car.

Whether you’re purchasing a brand-new vehicle that still has that new-car smell or a used car that has a few extra miles on it, there are advantages and disadvantages to either option. Take a look at your budget and make the decision that’s right for your finances.