5 Things to Consider When Deciding Between a New or Used Car
When it comes to replacing your car, the decision can be stressful. Add the choice between purchasing a new or used car and it may feel downright overwhelming. But it doesn’t have to be. With the proper research and preparation, getting a new car can be an exciting decision.
There are many things to consider when deciding between a new or used car. Unfortunately, there is no right or wrong answer for everyone. For some, a new car is the best option, and for others, a used car. This guide will go over some of the main things you should consider as you make this decision.
The number one thing to be considered when deciding between new or used cars is finances. Aside from the cost of purchasing a new or used car, you’ll need to consider loans, down payments, credit score, auto insurance, and more.
Your credit score will be a big determining factor in the car options you have to choose from. A poor credit score may mean than a new car is not an option. But a high credit score doesn’t mean that you automatically should purchase a new car, there is still more to consider. If a poor credit score or some other situation makes it difficult to get a loan from a bank, look into a hard money loan. Working with private money lenders to get a private loan will allow you to get the loan you need and may even be a faster process than going through a bank.
You will also want to consider how much money you have saved and how much debt you are willing to take on. With good savings and a used car purchase, you may be able to take on very low debt. But the same can be said for a new car. Make sure that you work through your budget and savings before you decide between looking at new or used cars.
Besides upfront costs for the car, you will also want to consider what you’ll be paying for auto insurance on a new car vs. a used car. The simple answer is that new cars cost more to insure because they cost more to replace if stolen or damaged. However, there are a few factors that raise insurance rates for used cars as well. An older or vintage used car could be more expensive for your insurance if certain parts have been discontinued. These parts would be difficult to find and pricy to get if they need to be replaced. Used and older cars don’t have the most updated safety features, making them easier to break into or steal. Insurance companies often offer discounts for cars with the latest safety features, and new cars are more likely to have these options than used cars.
Because there is so much to consider, there is no clear winner in regards to the cost for new cars vs. used cars. Depending on your situation and the car you purchase, either option could be a more financially sound choice.
Used cars versus new cars take very different time commitments. The time it takes to purchase a new car will be a few hours, depending on your negotiation process and how long it takes to get your approval for your loan. Once you drive the car off the lot, you shouldn’t have to worry about maintenance or anything else that will take large amounts of time. Used cars are another story. As long as you purchase a used car that has been well maintained, you won’t need to worry. But if you purchase a car that needs more work, you’ll have to be prepared for the time it will take in a garage for the auto repairs and find another mode of transportation for the time being. Different career opportunities offer rental cars for their workers, so keep that in mind if you’re in this situation. If you plan on making the repairs yourself, that may take even more time as you wait for parts to be delivered.
There are other time commitment issues to consider when it comes to getting a new or used car. If you are purchasing a bigger car, you may need to invest in a garage conversion to have a safe place with enough space to store your car. If you purchase a new car that isn’t at the dealership yet, you’ll have to wait for it to be delivered, possibly from overseas. Waiting to be approved for a loan for your car can also take some considerable time depending on your financial numbers and what kind of company you’re working with. Be prepared for all of these different time commitment scenarios as you make your car buying decision.
When it comes to time commitment, a new car tends to be the best option.
When deciding between a new car versus a used car, the time and money you’ll spend on maintenance should be a big part of your consideration. All cars require maintenance at some point, but it’s a matter of how often and total cost. New cars, unless you get a lemon, should not require much if any maintenance for the first few years, besides regular checkups and oil changes. With new cars, you’ll often get special warranties. So if there are any maintenance issues, they’ll be covered under that warranty. You may also get special emergency care or roadside service offers with the purchase of a new car.
With used cars, depending on the condition of the car, you may have to spend a considerable amount of time and money on maintenance. Thankfully there are reliable companies and sources to purchase used cars from so you won’t have to worry about hidden problems or issues. But if you purchase from a private party, there is the possibility that there will be some issues. You may even choose to buy a car that has problems because it’s a lower cost upfront. Some maintenance issues you may have to consider with purchasing a used car are ac repair services, part replacement, cleaning, fees for time spent in garages, etc.
Similar to considering the time commitment, considering the maintenance that will be required for your car should be something you think about before deciding to go with a new or used car. New cars seem to be the best choice in regards to maintenance as they will likely save you both time and money.
Picture this, you’re at the Chevrolet dealer, getting ready to drive off the lot with your shiny, brand new car. Yes, it’s an exiting situation. But there’s something important you need to know; the value of your car will depreciate by about 10% the minute you drive it off the lot. If you’ve purchased a car that costs $30,000, it’ll lose $6,000 in that first joy ride. By the end of the year, it will lose 30% of its value.
Used cars depreciate at a much slower rate than new cars. A used car that costs $15,000 would depreciate about $5,000 in three years versus the $10,000 a new car could depreciate. So, when making the decision between a new or used car, before you get anywhere near taking that first joy ride, you need to consider the rate your car will depreciate and if the car is worth that extra loss.
When it comes to depreciation, a used car is clearly the best choice. You’ll save a much larger amount of money over the years as a used car depreciates much slower than a new car.
Making the Decision
Financials, time commitment, maintenance, and depreciation are some of the top areas you should consider when deciding between a new or used car. Next, we’ll dive into the benefits of each respective choice.
Pros of New Cars
Buying a new car may be the simpler of the two options and, let’s be honest, is the most prestigious choice. You don’t hear people bragging to their friends about the great used car they got. Aside from the general simplicity of purchasing a new car, there are quite a few pros that come with this choice.
- Special Incentives: When you purchase a new car, there are often special incentives you can receive from the dealership. These could include 0% financing for a set amount of time, special warranties on your car, roadside assistance, low-interest rates, etc. If you’re prepared to haggle, you may even be able to negotiate additional bonuses or a lower price overall.
- Trade-in Equity: Many car dealerships will accept your old car as trade-in equity on your new car. If you’ve done your research and know how much your old car is worth, this may make getting rid of your old car much simpler as you won’t have to worry about selling it to an outside party.
- Lastest Technology: New cars come with the added bonus of having the latest and greatest technology. Whether it’s BlueTooth hookup for your phone, blind-spot monitoring, backup cameras, or GPS tracking, purchasing a new car will give you these added features and make driving a more enjoyable experience.
Pros of Used Cars
In the United States, used cars make up 3 out of 4 automotive sales. While it may not be the most prestigious choice, there are a lot of benefits that come with purchasing a used car.
- Lower Upfront Cost: It’s no surprise that in general used cars cost less than new cars. With a lower upfront cost, you’ll be able to take out less in loans, pay less in interest, and pay off your car sooner than you might with a new car.
- Lower Auto Insurance: Because a used car costs less than a new car, your auto insurance rates will also be lower. Purchasing a new car will not only save you money upfront but also cost less in the long run as you’ll pay less annually for your auto insurance. While you’ll want to find auto insurance that costs the least amount, make sure that the company will cover all of your needs. For example, if you’ll be doing a lot of freeway driving, find an insurance company that can recommend a good truck accident lawyer. Find an insurance company that communicates well and is helpful for your specific situations will provide a lot of peace of mind.
- Certified Pre-Owned: As used cars make up a majority of automotive sales each year, there are lots of options for in detail and trustworthy verification checks on a used car. There are companies and dealerships that specialize in pre-owned cars and have done all the hard work in ensuring that it’s in good condition. Purchasing a used car through a company like this will give you a lot of peace of mind in knowing that you aren’t purchasing a car with a lot of required maintenance.
- More Options: When purchasing a used car, you’ll have a lot more options to pick from in your price range. While you may not have the most up to date technology, you can still purchase a fairly new car for a fantastic deal.
Ultimately, the choice between a new or used car comes down to your personal situation. While one choice is better for some, the opposite is better for others. Make sure that as you make this decision you have considered all of the previously stated options and make the choice that is best for you.