Purchasing a car is often a major investment. For this reason, you would want to ensure that you get the best return for the cost. Sometimes there are a lot of reasons to consider purchasing a well-maintained used car rather than going with a new one. But, at the same time, a new car may be in your best interests. Here are the advantages and disadvantages of buying a new or used car to help you decide which option is right for you.
Advantages of Buying a New Car
– A new car is usually in the best condition possible. This means it should have no previous wear, pesky mechanical problems, or body damage, making it easy and cheaper to run and maintain.
– A new car typically comes fully equipped with the latest state-of-the-art features and options. This gives you the flexibility to order a car with the luxury or convenient features that you want.
– A new car comes with a comprehensive or extended warranty covering the cost of repairs and labour for anywhere from 2 to 4 years or 35,000 to 50,000 miles, whichever comes first. The warranty can save you a lot of money on your auto repairs.
Disadvantages of Buying a New Car
– A new car typically comes with a higher upfront price tag. One way to make your purchase more affordable is to obtain financing; but be sure to check the loan terms and interest rates to ensure they fit your budget as the new car payment will be much higher.
– New cars experience instant and rapid depreciation. Statistics indicate that new cars lose 15% or more of their value the minute you drive them off the showroom, and depreciate 40% or more within the first year. As a result, you could end up losing hundreds or even thousands of dollars when you buy a new car.
Advantages of Buying a Used Car
– A used car usually has a much lower price and can offer a much better value overall. However, if the deal turns out to be a bad one, the seller will likely not allow you to return it.
– While used cars continue to depreciate, their depreciation rate is much lower. New cars lose over 40% of their value during the first year and depreciate the most within the first three years. Because the previous owner(s) take the largest hit from depreciation, you’re likely to get more for your money if you purchase a used car that’s at least 3 years old.
– When buying a used car, you will have more choices and better financing options. For example you could buy a used car directly from the owner or you could buy a certified pre-owned car from a dealership. Buying a used car from the owner will give you a chance to negotiate a lower price and save on any fees or commission that may be associated with a used car dealership.
– Reputable used car dealerships offer extensive inspections, extended warranty and other incentives, allowing prospective car owners – like you – to get their hands on a quality car at an affordable price.
Disadvantages of Buying a Used Car
When it comes to deciding whether to buy a new or used car, it all depends on your individual circumstance. So consider your individual needs and situation as well as the pros and cons of each option, then establish a realistic savings goal and timeline to ensure you will have enough for the total cost of the car or the down payment (if you decide to seek financing).