September 18, 2021

Should I Buy a New vs Used Car

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Trying to decide between buying a new or used car? Before you walk into the dealership, learn the pros and cons of new vs used.

If you're in the market for a car, most people will tell you to buy used. Some even compare buying a brand-new car to throwing money away.

But it's not that simple.

And there are reasons why you might want to buy a new car. In this article, let's break down the best reasons for buying new vs used. Plus, how to decide which is best for you.

Is it better to buy a new or used car? New cars are more expensive, but you can get the model and features that you want. Used cars can save you money but the model you want might not be available. Plus, you'll have to consider maintenance a whole lot more.

Review your financial situation and personal preferences to determine which makes sense for you.

Is it Best to Buy a New or Used Car?

The choice to buy new or used depends on your priorities. If you care most about price and you just need to get from point A to point B, buying used can be the way to go.

According to the National Automobile Dealers Association, the average person owns 13 cars in a lifetime. If you purchased all 13 cars as a 3-year-old used vehicle instead of purchasing new, you could save $130,000 in your lifetime.

Overall, buying used can save you a ton of money upfront, but it might also cost you more over the long run.

Pros and Cons of Buying New vs Used

There are benefits to both options. You'll want to consider how the car depreciates and what type of financing you can get. Here are the must-know pros and cons of each.

Advantages of Buying a New Car?

There are a few reasons why you should buy new:

  1. Better gas mileage - Gas mileage improves over time and new models tend to get the most miles per gallon. If you drive a lot, a new car might be more eco-friendly.

  2. Lasts longer - Nowadays, vehicles last about 200,000 miles (300,000 for electric vehicles), so a new car is likely to give you more longevity.

  3. Reliability and peace of mind - You'll worry less about car-repair issues and maintenance.

  4. Easier time shopping - New cars are generally in perfect condition and there's no need to take it to the mechanic.

  5. More financing options - New car loans have better rates. With that, plus any extra perks they offer (like cash rebates or free oil changes), you might pay to pay much less than the sticker price.

  6. Better warranty coverage - Something's bound to go wrong with your vehicle. New cars have a much more extensive warranty cover than used cars.

  7. Slower depreciation - According to CarFax, new cars lose 10% of their value in the first month and as much as 20% after the first year.

Here's the deal: If you buy a new car and drive it for a long time, the price difference isn't that huge. Let's say your car costs $20,000, you pay it off in five years and drive it for 8 years total, you can sell your car for about $10,000.

For each year of having the car, you paid $1,250 per year. That's not too bad. And the longer you drive the car, the less you pay for each year.

The depreciation rate isn't the same across the board. Some brands are known for holding their value better than other cars.

Why Should You Never Buy a New Car?

So, why shouldn't you buy new?

There's no hard and fast rule, but this is what you should consider:

  1. Your car depreciates 20% as soon as you drive it off the lot- Let's say you buy a new $30,000 car. You can sell it for $15,000 three years later. You lost $15,000 in depreciation.

    Now, let's say you buy a used, 3-year-old version of that same car for $15,000. You could sell it for $10,000 three years later. Your used car only costs you $5,000 in depreciation.

  2. Registry renewals are cheaper - The price of registering a car decreases every year.

  3. Get luxury cars for less - You can save 30% or more to get the upgraded features and model you want.

  4. Insurance - Insurance rates tend to be lower for used cars compared to new. Since insurance premiums are monthly, you'll save quite a bit over a few years.

How to Save Money on a New or Used Car Purchases

Take a look at these best practices for getting a great deal on your next car:

  1. Shop at the end of the year - If you're starting your new car hunt, you can get the most amazing prices at the end of the year. That's because dealers need to beat their quotas and are more likely to negotiate lower prices.

  2. Choose a reliable car - You want to be able to drive your new car around for at least 10 years.

  3. Negotiate with dealers - If you don't like to haggle, bring someone who does with you.

  4. Get a great loan interest rate - Having a good credit score can really help you out here.

New vs Used Car insurance

You'll generally pay less for insurance on used cars. New cars are more valuable and more expensive to repair. Insurance companies will take the age of vehicle and car value into account when charging premiums.

Whether you're buying new or used, most people just want the most affordable car insurance that gets the job done.

New vs Used: Which is Better?

Buying a vehicle is a big purchase. Take time to do your research and choose a vehicle that fits within your budget. Before you sit down to haggle on price, make sure to decide on the make and model you want to use.

Amber Kong is a content and creative at CreditDonkey, a personal finance comparison and reviews website. Write to Amber Kong at amber.kong@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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