If you’ve decided that it’s time to buy a car, it doesn’t necessarily have to be brand new. While you won’t get that new car smell in a pre-owned vehicle, buying used does offer some distinct advantages. Here are the pros and cons of new and used cars, which will help simplify your car buying process.
Buying a New Car
New cars offer the latest safety and technology features. If having the latest bells and whistles is important to you, you might prefer buying new. Also, since the car is factory-fresh, you’ll be able to sort through dealer inventory to find a model with the exact options you want.
New cars also tend to offer more peace of mind. Since you’ll be the first one to rack up the miles on your car, SUV or truck, you get the benefit of the full factory warranty. And since no one else has owned the car, you don’t need to worry about accidents or service and repair issues that may have been caused by the previous owner.
With so many advantages, there’s one big elephant in the room if you’re considering a new car: price. New cars generally cost more than similarly-equipped used cars that have suffered a few years of wear and tear, and they also depreciate rapidly. A new car loses value the minute you drive it off the lot. If you finance your car with little or no money down, you could end up upside down on your auto loan, which means your car isn’t worth as much as your loan's balance. But if you plan to keep the car for a long period of time, this option makes sense.
Buying a Used Car
Since the major disadvantage of new cars is a higher price tag, it makes sense that you’ll have more buying power if you shop used. New cars take the biggest hit on depreciation in the first two to three years, so you’ll save money by letting the previous owner take that loss.
Conveniently, many new car leases occur when depreciation is at its worst. When those leases end, the vehicles return to the dealerships as used car inventory. Since leased vehicles come with mileage restrictions and must be returned in good condition, they’re often a good choice on the used car lot.
Newer, low-mileage used cars still retain a portion of their existing factory warranties, but some automakers also offer used cars and trucks as certified pre-owned vehicles. Certified cars, trucks and SUVs provide some peace of mind since they are usually subject to an inspection and backed by an additional warranty. However, that serenity usually comes at a price. Certified pre-owned cars typically cost more since they go above and beyond with better warranty coverage.
Ignorance is bliss in some cases, but not when it comes to shopping for a used car. Older used cars often carry little or no warranty coverage, which can leave you without a safety net if the car needs expensive repairs. Although buying used can save you a tremendous amount of money, you need to be diligent in your research to ensure that you’re making a smart buy.
Used Car Tips
Start by checking the reliability scores of the makes and models you’re considering. Websites like J.D. Power and Associates ( ) provide ratings for quality, reliability and dependability that will help you assess the potential pitfalls of your next used car.
Once you’ve narrowed your search to specific makes and models, you can choose between buying your used car from a dealership or a private seller. Often times, buying from a private seller can save you some money, but it’s also less convenient since they won’t have multiple cars to cross-shop like a dealership. You also have less protection if the private party sells you a car with mechanical problems or issues.
Regardless of where you buy your used car, be sure to get an idea of its vehicle history. Services like Carfax ( ) and AutoCheck ( ) provide detailed vehicle reports that will help you check the car’s accident history, service records and mileage. Most dealerships will provide a vehicle history report upon request, but you can also purchase one yourself if you’re buying from a private seller.
Having a mechanic inspect your car is always a good idea. It will require a little extra time and money, but a good inspection could save you thousands if the car you’re considering is riddled with mechanical issues. If the seller won’t let a mechanic inspect the vehicle you want to buy, walk away. Even if the car is in mint condition, buying it isn’t worth the risk if the seller won’t let you make an informed decision.
New and Used Car Prices
Once you’ve found a car that suits your needs, you’ll want to make sure you’re paying a fair price. Sites like Kelley Blue Book ( ) and Edmunds ( ) can help you figure out what you should pay for new and used cars by assessing its mileage, options and condition.
These estimates will vary, especially on used cars, with different prices for private sellers and dealers, but it also pays to know what comparable cars are selling for in your area. If other sellers are offering a similar car at a lower price, you may be able to use that as leverage in your negotiating process.
The Bottom Line
While new cars command a higher price, you’ll get the assurance of brand-new components and the full warranty. Used cars require research to make a smart buy, but if you do your homework, a reliable used car can save you money in the long run.