For decades, our great nation has been fiercely divided over one all-important debate: Should you buy a new or used car?
You’ll find energized champions on each side of the aisle, defending their new vs. used car preferences to the
death point of exasperation. They believe their way is the only way when it comes to cars. And, as presidential debate seasons ramps up, we thought it only fitting to dive headfirst into this heated debate ourselves.
Buying a car is not a decision to take lightly, which is why you should tread carefully before making any type of automotive purchase. If not, you could find yourself losing thousands of dollars and stranded out in the cold, literally.
How to Decide on a New or Used Car
Deciding whether or not to buy a new or used car involves many factors. Rather than make an impulse purchase based entirely on emotion, it helps to make a list of important factors to consider that will lead you to the most rational decision possible. A well-researched decision can save you time and money, so here are a few things to consider the next time you go car shopping.
When it comes to the sticker price, it’s pretty obvious that new cars are far more expensive than used cars. Of course, you have to compare apples to apples. If you pit a new Toyota Corolla vs. a used Lexus, you’re results will be skewed. Also, keep in mind that you may need cash for a down payment. The down payment on a new car is going to be significantly more than a down payment on the less expensive used car.
- The Verdict: This one isn’t really a contest. If you’re comparing apples to apples, buying a used car will win on price every time.
Remember that price and value are two separate things. The price is the amount that you actually pay for something. Value is what it is worth, which can make it much more difficult to assess. For example, you may find value in the comforts of a Lexus that you don’t get from a Corolla. Thus, you’d get more value from buying a used Lexus than you would paying the same price for a new Corolla. You should always keep “market value” in mind, as well. According to Edmunds.com, on average, the market value of a new car loses a whopping 11% the second you drive off the lot. Over a five-year period, your car’s value will drop a total of 63 percent. No matter how much you love your new car, that type of depreciation can be difficult to swallow.
- The Verdict: If you’re looking to get the most value out of a vehicle, chalk another one up for used cars. Regardless of whether your looking to get more for your money or actual market value, used cars are the clear winner. By letting somebody else take the largest hit in depreciation upfront, ultimately, you can save money on your purchase.
One of the best things about buying a new car is knowing you shouldn’t have to make any repairs on it for quite some time. The same can’t always be said for buying used, however. Repairs and maintenance on a used car can be costly. When you buy new, you shouldn’t have any issues for a while, and that is usually backed up by a hefty warranty. Buying used can be an adventure, and not in a good way. You never quite know what issues you may run into.
- The Verdict: Score one for new car lovers everywhere. Of course, a lot depends on the make and model of the car you buy. However, if you’re worried about expensive maintenance costs, take comfort in the fact that those costs should come much further down the line with a new car.
Speaking of warranties, all of the major car manufacturers offer some type of warranty on their vehicles. The beauty of buying new is that you get to take full advantage of them. Typically, bumper-to-bumper warranties will last 3 years/36,000 miles while powertrain warranties are 5 years/60,000 miles. Keep in mind that these warranties represent an either/or, which means they can expire rather quickly if you drive a lot. And, while nearly all new cars come with a warranty, used cars may or may not.
- The Verdict: We’ll give a very slight edge to new cars here. If you purchased a certified preowned car, chances are good that the original manufacturer warranty will transfer to you. However, know that these warranties start on the date of the first purchase, not the date of the model. Always be sure to clarify whether or not the warranty is transferrable when buying a used car.
Whether you are buying a new or used car, the last thing in the world you want is to be stranded on the side of a road somewhere. That’s where the reliability factor comes in. While you might think new cars are always more reliable than used cars, that isn’t always the case. A friend of mine recently bought a new car off the lot, and has had nothing but problems since. After about 2 months of hassle, the dealer finally returned her money and let her trade it in for something new.
- The Verdict: Again, this is a slight victory for buying new. In theory, new cars should be more reliable, but it totally depends on each individual vehicle. In today’s market, certified preowned vehicles may be just as reliable as new models.
The cost of buying a car doesn’t end the moment you drive off the lot. In addition to maintenance and repair costs, you also need to think about how your your insurance rates could change. New cars can cost a lot more in insurance premiums over time, with a small monthly increase of $50 adding up to an extra $600 per year. Whether you’re buying used or new, keep that in mind when you negotiate the final price.
- The Verdict: Here’s another clear win for buying a used car. While not as important as depreciation costs, buying used can save you a few thousand dollars in insurance costs over time.
When it comes to cars, it is hard to rule out the vanity factor. I mean, who doesn’t love the smell of a new car? Plus, it just feels really cool to pull off the lot in a car that nobody else has ever owned. And, you get to brag to your friends about your new ride, which is always a good time.
- The Verdict: If you’re into this sort of thing, buying a new car may be for you. Of course, you can get most of those same warm fuzzies if you buy a used car off of a dealer’s lot. So, yeah, let’s call it a push.
It’s Your Call
Regardless of whether you decide to buy a new or used car, the most important factor is that you find the “right” car for you. While buying a used car might make the most financial sense in theory, it certainly won’t save you money if you buy a complete lemon. But, that doesn’t mean you should rush out and buy a new car either. These days, you can find many used cars that are just as reliable as some of the newer models.
The decision is yours. Shop around. Do your research. Then, do your best to make the most rational decision possible.
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