New Car vs Used Car - What's the Right Option for You?
When it comes to purchasing a vehicle, the new car vs used car question will be the first – and possibly the most important – decision that you will have to make.
Buying a car can be a major financial investment, and as a consumer, you want to get the best deal for your money. Deciding between a new or used vehicle will depend on a number of factors including your budget, financing options, warranties, selection, and your peace of mind.
It's new. Perhaps the most important advantage is also the most obvious one – a new car isn't used. You don't have to worry about how it was treated by previous owners and there has been no wear and tear or cosmetic damages such as scratches, stains, or dings. It has no history, no past, and it has that new car smell, too!
It can be customized. Many new cars can be built to order so you can specify everything from the color to the added options. With the large number of used cars on the market, it is possible to shop with a list of features in mind, and some dealers will even look for a car that meets as many of your requests as possible. However, there is still the possibility that you will not find exactly what you are looking for. If you are really particular, then you may appreciate the benefits of being able to customize your vehicle to your specifications.
Manufacturer warranties. Most automakers offer great comprehensive warranties that cover vehicles for at least 3 years, and often longer. In addition, some manufacturers also provide powertrain coverage that a can extend beyond the original warranty and may be valid for up to 10 years or 200,000 miles. If something goes wrong, you won't have the unexpected expense of paying for repairs. And, many manufacturer warranties can be transferred to a second owner, so even if you purchase a used vehicle, you may still be able to take advantage of great coverage at no additional cost.
Roadside assistance. Almost every new car comes with roadside assistance which is valid for the duration of the manufacturer warranty. This coverage is also available on used vehicles; however, it will usually be at your own expense.
Latest technology. New cars may have more advanced technology. Many manufacturers promote their latest models by boasting about added features such as blind-spot monitoring, park and brake assist, tire pressure monitoring, voice activated programs, and state-of-the-art navigational systems. If you want the most up-to-date “bells and whistles” then a new car may be the way to go. Keep in mind, though, that several late-model used vehicles are equipped with a lot of modern technology as well, so it may be beneficial to see what is available.
Higher fuel efficiency and the latest safety features. New laws are forcing automakers to produce vehicles that are cleaner and more fuel efficient. At this point, the number of used hybrids is limited, and some of the latest technology can only be found in the newest vehicles. Manufacturers are also constantly upgrading safety features, so a new vehicles will be equipped with the most recent updates.
Financing. Banks usually offer lower interest rates on new vehicles, and many manufacturers promote programs with low, or even 0% interest. Depending on your options, financing may be less expensive on a new vehicle than a used one.
Maintenance. Many new cars include free scheduled maintenance for a specified amount of time. In addition, a new car should be virtually problem free for the first few years and shouldn't need repairs such as tires, battery, brakes, or muffler. Keep in mind that most manufacturers require that all maintenance and repairs be completed at their dealerships, which may not always be convenient. Most used car warranties allow you to have work done at any licensed business of your choice.
Time. When buying a new car, once you decide on the make – or even the manufacturer – much of the work involved in finding exactly what you want will be the salesperson's responsibility. Purchasing a used car can mean hours of scouring the internet and travelling from one used dealership to another until you find what you are looking for.
Disadvantages of Buying New
Cost. The purchase price and taxes of a new car will be higher than a used vehicle. You should also watch for any additional fees, such as freight/PDI.
Depreciation. A new vehicle depreciates the most in the first 2-3 years after purchase. In fact, it will lose a significant amount of value as soon as you drive it off the lot. For example, according to the Canadian Black Book, the average asking price for a new 2013 Chevrolet Cruze LT 4 door sedan is $18, 318. This same vehicle, sold as used with approximately 20,000 km (12,400 miles), is valued at about $12,350. Of course, this figure could vary depending on the dealership and vehicle condition, but that is still a huge financial loss for a car that is less than a year old.
Reliability. The reliability for a new model year is still unknown. Although most major issues are covered by manufacturer warranties, there is still a lot of inconvenience involved with owning a vehicle that requires regular or major repairs.
Higher insurance costs. When comparing similar makes and models, new cars cost more to insure than used vehicles.
Advantages of Buying Used
Price. Used cars are less expensive to buy. Sometimes, you can find a late-model vehicle for less than half of its original price. And, since used cars are more affordable, you may be able to find something more luxurious, with features that would be beyond your budget if you were buying new.
There's a car for any budget. Even the cheapest new car can be expensive if you are on a tight budget. The used car market has a much wider price range so you can find something that fits your needs as well as your budget.
Less depreciation. The biggest loss of value happens within the first couple of years, with a large decline occurring the minute you drive off the lot. When you buy a used vehicle, you can take advantage of slower depreciation. If you are making loan payments, at least you will know that you can sell your car to pay off the balance if necessary. Many people who are obligated to new car contracts actually owe more than their vehicle is worth.
Selection. Although you cannot custom design a used car, there are so many vehicles available that you will have a wide variety to choose from. Maybe you like the style of a particular model year or are looking for an options package that has been discontinued. In this case, you might find exactly what you are looking for at a used car dealership.
Insurance rates. Typically, used cars are less expensive to insure than new ones.
Warranties. Many manufacturer warranties can be transferred to a second owner. So, you will still get the benefits of the warranty without having to pay the new vehicle price. As well, most used car dealerships offer extended warranty options that will give you peace of mind knowing that you are protected from the high cost of unexpected repairs. And, unlike most warranties offered by automakers, these policies usually allow you to choose the repair facility so you can find somewhere that is close or convenient.
Reliable data. With a simple internet search, you can find out important facts about the make and model that you are considering. Ratings sites will tell you about a particular vehicle's reliability, comfort, fuel mileage, and any common major repairs or problems.
Disadvantages of Buying Used
It's not new. You are buying a vehicle that has history and you don't always know what that history involves. Used car searches and packages will give you any available information so you will know if the vehicle has had major repairs or been in a serious accident. However, there is much that isn't reported. You don't know how well the car was treated by previous owners, so it is important to do some research before making a final purchase.
Higher maintenance costs. A used car will require certain repairs sooner than a newer one. Depending on the mileage, you may be replacing brakes, alternators, or batteries soon after you purchase the vehicle. To be better prepared, find out as much as possible about the vehicle and ask the dealership/owner about any repairs that have been completed. If they replaced the brakes before they put the car up for sale, then you know that this issue will not be a concern for quite a while.
Higher financing rates. While good financing is available for used cars, the best rates are usually found when purchasing a new vehicle. Generally, you can expect financing to cost more when buying a used car.
You may not be able to find exactly what you want. In some cases, you may have to adjust your list of “wants”, but the savings may be well worth the compromise.
Almost every buyer will ask the new car vs used car question. The answer will depend on several factors and you should consider your options carefully. It may look like the advantages to buying new far outweigh the benefits of purchasing a used vehicle; however, looks can be deceiving.
While buying a new vehicle can offer lower financing rates and longer warranty terms, the depreciation and financial commitment can make it an unwise choice. Many people believe that a used car is a smarter investment because you can get more for your dollar without having to worry about huge value losses the minute you drive off the lot.