When you’re buying a car, whether new or used, you need to have flexibility and patience most of all. There’s a vast difference between buying a new car and a used one. Which one is better to purchase? Let’s talk about it!
Is Buying a Car Necessary?
This is a question that only you can answer. If you work or go to school far away, and the city you live in doesn’t have a public transportation system, it’s a good idea to buy a car. However, if you live close to your job, school, or other places you frequent often, or have a great public transportation system in your city, having a car may be more of a hassle. However, the choice is yours.
Buying a New vs. a Used Car
There are a lot of factors you need to consider whether you’re purchasing a new or used vehicle. Did you know that the average individual owns 13 vehicles in their lifetime? Each vehicle on average, is about $30,000 per vehicle if the vehicle is used and at least 3 years old. In your lifetime, you can save approximately $130,000 by purchasing used vehicles instead of new ones.
When you’re ready to purchase a vehicle, there are a lot of different options available and different factors you need to consider. First, determine whether you’re going to purchase a new or used vehicle, then consider the make and model of the vehicle you want. Your decisions in this situation will greatly impact the financial aspect of things.
It’s no surprise that buying a new car will cost more than buying a used one. However, we’re not here to tell you what to do. It’s a good idea to create a budget and stick to it!
What Are the Advantages of Buying a Used Car?
No, used cars aren’t new, but the car is new to you! One of the most overlooked benefits of buying a used car is that you’re letting another person take the vehicle’s depreciation hit. What’s depreciation? The vehicle you purchase loses some of its value before you drive off the lot. Since you didn’t purchase the car fresh off the car lot, you didn’t have to take the depreciation hit. Other advantages of buying a used car can include other factors.
Getting the Best Car for Your Money
Of course, getting a vehicle, new or used will cost money. The trick is to get the best vehicle for your money. Buying a used car often means that you can find a late-model vehicle that’s priced at half the cost of a new one. Many dealerships have pre-certified vehicle programs that have good warranties.
Resale Value
Used cars are often good for their resale value. If you sell the vehicle in the future, you’ll be able to sell it for the same amount you paid in a few years. If you buy a used vehicle, you can also benefit from different financing options if you use a bank or credit union.
What Are the Disadvantages of Buying a Used Car
Since you have to take the good with the bad, we have to discuss the downside of buying a used car. The advantages of buying a used car can include a variety of things.
Reliability
Reliability is one of the most significant disadvantages of buying a used car. When it comes to reliability, a used vehicle may require more repairs than a new vehicle, or the vehicle may not be able to keep up with your travel needs. Likely, you don’t know how well or how poorly the previous owner maintained the vehicle or the reason they traded in the vehicle.
Compromising
Since you’re not buying a used car, you may have to compromise on a few things, such as the color of the vehicle and its features. You may also have to compromise on the buying options. Used vehicles often have a poorer vehicle history and more mileage than new vehicles.
What Are the Advantages of Buying a New Car?
Buying a new car can mean a lot of bells and whistles. Shopping for a new car is less of a hassle than shopping for a used car. Why? You don’t have to worry about the car’s condition or its mileage. If we’re looking at things from a financial aspect, you won’t have to determine how much the vehicle costs, even if you decide to negotiate the price.
More Financing Options
When you’re buying a new car, you’ll notice that there are a lot of incentives to encourage you to purchase the vehicle. If you are getting a car loan, you may have a better interest rate, so you’ll be paying thousands of dollars less than the sticker price after negotiating and applying incentives.
Advanced Technology
New vehicles often have advanced technology that provides better gas mileage and lower emissions. Other advanced technology features can include touch displays, an infotainment system, a GPS, and other features.
Disadvantages of Buying a New Car
The biggest disadvantage of purchasing a new vehicle is depreciation. The biggest vehicle depreciation will occur in the first 2 or 3 years, which means you’ll be throwing away thousands of dollars you won’t see again.
Increased Debt
New vehicles come with higher auto insurance premiums because it will cost more to replace the vehicle.
What About Certified Pre-Owned Vehicles?
As with any used vehicle, you won’t know much, if anything, about the car’s maintenance, unless you’re buying the vehicle from someone you know. The best action to take is to have a mechanic thoroughly check the vehicle to minimize the risk of vehicle breakdown or malfunction.
The Certified Pre-Owned (CPO) program allows buyers to choose between a used car’s lower price and the reliability of a newer vehicle. Vehicles that are in this program are often less than 3 years old and don’t have a history of major damage. CPO vehicles also have low mileage, and they’re required to pass strict inspections. Once the vehicle is approved, it receives a new warranty that extends beyond the original factory warranty.
Don’t Skip Your Research
You may not feel like researching different vehicle prices, trims, features, and other information, but it’s worth it. Used cars require more research than new cars. When you’re researching, you’ll need to find a dealership or person who is selling the type of car you want, then figure out if you’re willing to pay the asking price or if you plan on negotiating. Here are a few other factors you’ll need to consider when you’re researching vehicles.
Shop Around
Shopping around may get frustrating at times, but it’s necessary. Whether you’re interested in buying a used or new car, you can search online for cars or visit car dealerships in person. Shopping around and weighing your options are part of the car-buying process.
Check the Car’s Value
You’ll need to know the car’s value. Comparing values and prices online will make this process easy for you. Find a website online that allows you to check the prices of the car models you’re interested in. You can find almost all the information about the vehicles that interest you for free. Some websites may require you to create an account before vehicle prices are revealed.
Check the Vehicle’s History Report
A car’s history report is essential. With this report, you can find out a lot about the vehicle, such as the following:
- Car ownership information
- Title status
- Accident history
- Mortgage
Information regarding the vehicle is found using the vehicle’s vehicle identification number (VIN). There are a lot of different websites you can use to access a vehicle’s history report. Some of these websites are free, and other websites will charge you for their services, so make sure you pay attention.
Check the Car’s Title
If you’re buying a used car from an individual (private seller), you’re running the risk of purchasing a vehicle from a person who isn’t the legal owner of the vehicle. To protect yourself and avoid this risk, obtain the vehicle report from the National Motor Vehicle Title Information System.
Have the Car Inspected
Before you sign any agreements and any other forms, have the car inspected by a mechanic. This is another way to safeguard yourself from many scams and other mishaps. A great outward appearance can hide extensive repairs that are needed on the outside, which is why it is important to have the car inspected. You don’t want to spend money on a used car and then have to have to spend more money on repairs.
Pay in Cash if Possible
If possible, pay in cash in full. Did you know, that when you get a car loan, almost 11% of the ownership costs during the first 5 years are the loan’s interest? If you can’t pay in full with cash, try to negotiate a lower price.
Tips on Purchasing New and Used Vehicles
Experian states that the average car loan costs $29,880 for a total of 68 months, which averages approximately $500 each month. So, if you take out a car loan, with these numbers, you can expect to pay about $34,000 during the loan.
In a different instance, used vehicles have an average loan amount of approximately $19,000 for 63 months, which would make monthly payments of about $365. Used vehicle owners can expect to pay about $23,000, which is an $11,000 difference.
Here are a few tips that will help you save money when you’re purchasing a new or used vehicle:
- Check the reviews and ratings for the vehicle(s) you’re interested in purchasing. When you’re looking at the reviews, make sure you look at the ones that aren’t so great. Looking at the good and bad reviews gives you an insight into what to expect if you become an owner of the same vehicle, which is priceless. A lot of people don’t like surprises, especially when it comes to cars.
- You’ll need to know how expensive it is to repair and insure the vehicle. If you’re purchasing a high-end vehicle, such as a vehicle that is a performance or luxury vehicle, these vehicles often have parts that are difficult to locate and can only be repaired by a specialist.
- Don’t forget to take the car for a test drive. The one thing individuals forget to do is to test drive the vehicle during unfavorable weather. This sounds crazy, right? Test driving a vehicle in inclement weather allows you to see how the vehicle handles.
- Be prepared to negotiate. A lot of dealerships have a no-haggle price, but some don’t, so you should be prepared to negotiate. You may have more flexibility if you are purchasing a used car versus purchasing a new one.
Whether you’re shopping for a new or used vehicle, your personal preference and peace of mind are priorities. New model vehicles generally cost more but are equipped with the latest features and technology, while used vehicles are more budget-friendly, but are probably not as reliable.
What Factors Should I Consider When Purchasing a New or Used Car?
Purchasing a new or used vehicle is a big deal! Regardless of the vehicle type you’ll purchase, you’ll need to consider different factors. Here are some of the factors you need to consider to help you determine if a new or used vehicle is best for you.
Budget
Vehicle costs are often less expensive when you purchase a used vehicle. Such vehicle costs, such as dealer fees and the price of auto insurance, will be the least expensive when you purchase a used car. Depending on the make and model of the vehicle you choose, the purchase price will vary.
When you’re number-crunching to determine your car budget, think outside the box and consider fees other than the estimated monthly payment and the cost of insurance. You should consider different factors including fuel costs, registration fees, and maintenance and repairs.
If you’re going to get a vehicle loan, it’s a good idea to receive your approval amount before walking into a dealership. By doing this, not only are you more prepared, but you know what you can afford, which means you can choose specific features accordingly.
Available Bells and Whistles
One of the most sought-after benefits of buying a new car is the bells and whistles. New cars have the latest technology and safety features. If the car’s exterior and interior colors are important to you, buying a new car allows you to choose both colors. Buying a used car isn’t a bad thing, but if you purchase one, you may be spending a long time searching to get exactly what you want.
Although you may want the luxury of choosing your tire packing, technology features, and seating for a new vehicle, this option won’t outweigh the cost savings you’ll have if you purchase a used vehicle. Do you have concerns about the vehicle’s safety ratings? No problem. You can use the tools provided by the National Highway Traffic Safety Administration to check this information.
Maintenance Requirements
All vehicles require maintenance. There’s no way to get around this factor. An older vehicle will probably have higher maintenance costs than a newer vehicle, which is something you’ll want to consider if you have a strict budget. If you purchase a new vehicle, the required maintenance for these cars is often covered under a warranty.
However, if you purchase a used vehicle that’s no longer covered under a warranty, this doesn’t necessarily have to be a deal breaker. Most of the time, you can purchase an extended warranty on the vehicle to obtain additional vehicle protection. An added extended warranty can cost about $1,480, however, depending on different circumstances, an extended warranty could cost more or less.
Reliability
Reliability is essential when vehicles are concerned. You probably guessed that new cars are more reliable than used cars. However, this fact does not mean that used cars are not reliable. New vehicles that are fresh from the factory are backed by a comprehensive bumper-to-bumper warranty. Other good news is that new vehicles remain consistent, even after the warranty expires.
You may be wondering about CPO vehicles. Over the lifespan of one of these vehicles, the owner will experience 11% more problems than new cars. Although CPO vehicles endure inspections, they will still experience many problems over their lifetime. However, 11% is a lot better than the 31% for used vehicles. Used vehicles have 31% more issues than CPO vehicles.
Overall Satisfaction
Vehicle satisfaction is based on whether or not an individual would purchase or lease the same vehicle again. Of course, buyers of new vehicles were the most satisfied. CPO vehicle buyers could go either way, making their overall satisfaction at the half mark with some users saying they would purchase the vehicle again, and others saying they wouldn’t buy the vehicle again.
What Do I Need to Know About CPO Vehicles?
Purchasing a Certified Pre-Owned vehicle is another option you have. Maybe you don’t want a used car, but you don’t want a brand-new car either. CPO vehicles have likely been returned at the end of a 3-year lease. When the car was returned, it was inspected by the dealership, and maintenance and wear and tear issues were addressed.
CPO vehicles have extended warranties, which add years of coverage, and you also have a higher mileage cap. Roadside assistance is often included in the extended warranty package. It’s important that you understand what the warranty covers, such as payment for repairs, and other instances. CPO vehicles usually cost more than standard used vehicles but are less expensive than new cars.
How to Find the Best Car Deals
Whether you’re looking for a new or used vehicle, researching the vehicle is essential. Although researching a vehicle is time-consuming, it’s needed to help you get the best deal on a vehicle. When you’re researching vehicles, check the model’s safety record, the 5-year cost to own, and auto insurance costs.
When you’re shopping around, make time to test-drive different vehicles as you’re shopping around. If you’re getting a loan, get quotes from at least 3 different auto loan lenders. When you’re considering loan lenders, try to find the lowest monthly payment possible and the most competitive financing terms, which will help you keep hard-earned money in your pocket.
The Bottom Line
The choice between buying a new or used vehicle is solely up to you. However, it’s important to consider different factors when you’re making this decision to ensure you are purchasing a vehicle you can afford and be happy with. Congratulations on your new vehicle! Happy driving.