When shopping for a car, there are several decisions you need to make. One of the first and most important choices is whether to buy a new or used car.
New cars are usually more expensive than used cars, but they tend to have fewer mechanical problems. And even if they break down, the cost of repair is often borne by factory warranty.
Used vehicles, on the other hand, are often much cheaper than new cars. Although used cars usually have less wear and higher mileage, buying used can be a smarter financial decision for people on a budget.
If you’re deciding between a new and used car, it’s important to consider your unique needs and consider the pros and cons of each option.
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Advantages of Buying a New Car
Many drivers love the idea of buying a new car. It has the latest safety features and technology and is immaculate inside and out. Here are some of the biggest advantages of buying a new car:
New cars have the latest features
With the advancement of automotive technology, cars are becoming more and more useful for drivers. Today, new cars have innovative computer technology that makes the driving experience safer and more enjoyable.
For example, many new cars have driver assistance features that warn you of possible obstacles around your car, and some even automatically stop your car to avoid a collision. Of course, you can also use voice commands to make calls, send text messages, navigate and do a million other things, while on the go.
You may qualify for a great financing offer
As an incentive to buy a new car, it is common for dealers to offer special discounts and financing deals. This may involve cash back or 0 percent financing, making the vehicle a more affordable option.
A new car may have a better warranty
New cars are less likely to break down than used cars and most new cars come with a factory warranty. Most new car warranties are bumper-to-bumper warranties, meaning most common repair costs are covered. You can also get free roadside assistance with your purchase.
You can customize the vehicle
When you shop for a new car, you often have the option to choose the vehicle’s color, upholstery, accessories, trim level, and other features. You can also upgrade certain technological features of the car.
Cons of Buying a New Car
Despite all the benefits of buying a new car, there are also some disadvantages that you should consider. Here are some of the disadvantages of buying a new car:
It is more expensive
In most cases, new cars are more expensive than used cars. If you’re on a tight budget, a new car might not be in the cards. And even if you can afford a brand new car, you need to decide if a new car is worth the high cost.
You will pay more in sales tax
Because new cars typically cost more than used cars, you’ll also be responsible for paying a high sales tax on your purchase. The only exception is if you live in a state that does not have a sales tax.
New cars often depreciate at a faster rate
Data shows that new cars can lose up to 20 percent of its value in the first year of ownership. If you plan to sell your car later, you may not be able to sell it for enough to cover your debt on the loan. You can avoid this with a used car because most of the depreciation has already occurred by the time you buy it.
Advantages of Buying a Used Car
Buying a used car can be an excellent financial decision for many drivers, even if you’re looking for a luxury model. Here are some of the advantages of buying a used vehicle:
Used cars are cheaper than new cars
The biggest benefit of buying a used car is that it’s usually cheaper, especially if you want a specific model.
Buying a used car that is several years old can save you thousands of dollars. Plus, most of the depreciation has already taken place, which can make it easier to sell the car in the future.
You may find MSM offers
Some dealers offer specials to customers who purchase certified pre-owned (MSM) vehicles. The MSM car is a light used vehicle that is several years old and has been restored and repaired by the dealer.
Most MSM vehicles also come with a limited warranty that covers some repairs and maintenance. Check the website of the dealer you are considering buying from to see what offers are available.
Cons of Buying a Used Car
Buying a used car is not the best option for everyone. Here are some of the disadvantages of getting a used car:
Some used cars have outdated features
If you are looking for specific features, such as an advanced stereo system, panoramic sunroof or special safety features, a used car may not be a good choice. Older cars usually don’t have these features or don’t have certain functions at all that are common in newer cars.
You may have higher maintenance or repair costs
As cars get older, they sometimes need more frequent servicing. When buying a used car, keep in mind that you will likely spend more money on maintenance, especially if the car did not receive regular service under the previous owner. You may also have to spend money on new tires, brake pads, rotors or an oil change if the car is not up for maintenance.
The car purchase process may take longer
Buying a new car is relatively easy. You go to the dealership, test drive a few cars, and make a purchase. But if you’re shopping for a used car, you may need to do some extra research to find inventory in your area and visit a few dealerships. If the car you want isn’t immediately available, you could be waiting months to find what you’re looking for.
After finding a potential option, you then need to check vehicle history reports, schedule inspections and verify the car’s title, all of which can make the process take longer.
Is It Better to Get a New or Used Vehicle?
So, is it better to buy a new or used car? Ultimately, the decision depends on your personal situation, preferences and budget. Here are some things to consider as you weigh your options.
- Your budget: Cars can be very expensive, and if you’re hoping to score a lot, you might want to buy used. However, keep in mind that the true cost of car ownership is not just the sticker price of the car. It also includes things like maintenance costs, car insurance premiums, taxes and gas prices.
- Your vehicle needs: Think about the type of car you need for your lifestyle. Do you need a car with a certain number of seats? Do you need a truck to transport goods for your work? Make a list of your most important needs in a vehicle and use that list to decide whether a new or used car will work better for you.
- Your wishes in a vehicle: Some people just want to get their dream car, no matter the cost. Or, if you’ve decided on a make and model, and you don’t want to drive something pre-owned, a new car will be your best bet.
- Your purchase plan: The price of a new or used car you buy will depend on how you plan to buy it. If you pay cash, you don’t have to pay interest fees on the loan. If you’re planning to finance a car, you need to factor interest rates into your decision.
Frequently asked questions
Check out these answers to some common questions about buying a new or used car:
Why are used cars so expensive?
In recent years, the cost of used cars has reached an all-time high. This is due to supply shortages and restrictions during the COVID-19 pandemic. However, analysts expect Used car prices are down by about 2.5-5 percent for new cars and 10-20 percent for used cars towards 2023.
Still have a shortage of cars?
During the COVID-19 pandemic, there is a sudden shortage of new vehicles on the market. One of the biggest causes of the new car shortage is the global shortage of computer chips needed to build new cars. However, the shortage has begun to diminisheand should continue to improve in 2023.
Will new car prices drop in 2023?
Experts predict that new car prices will drop in 2023, but it’s possible that some brands will experience a more significant drop than others. If you’re planning to buy a car in 2023, don’t expect to get a great deal without shopping around, visiting a few dealerships, and being flexible in what you want.
Is buying a car in 2023 worth it?
Car prices are still higher than before the COVID-19 outbreak. However, prices began to fall. If you need to buy a vehicle soon, you can still find affordable options, especially if you’re open to used cars.
How can you get the lowest price for a car?
Regardless of the car market, it is always possible to find a good deal on a vehicle. Here are some suggestions for finding the lowest prices:
- Find low interest rates
- Find discounts and incentives
- Make a large down payment
- Pay for the car in cash
- Search for used cars online
- Consider buying a car from a private seller
Finance & Insurance Editor
Elizabeth Rivelli is a freelance writer with more than three years of experience covering personal finance and insurance. He has extensive knowledge of various lines of insurance, including auto insurance and property insurance. His byline has appeared in dozens of online financial publications, such as The Balance, Investopedia, Reviews.com, Forbes and Bankrate.