The debate betweeen buying a used car vs new car can be daunting. With a complete picture of the key factors to consider, you can make a more confident purchase decision. Here is a look at the benefits and drawbacks of each. Spoiler alert: There is no clear winner in the used car vs new car.
Price of used car vs new car
Used — Traditionally, price has been the biggest advantage in the used car vs new car corner.
New — The sticker price on a new vehicle will always be higher than its used equivalent.
Used — A used car may have a lower purchase price, but it could come with a higher interest rate. Used car dealers and financial institutions typically don’t offer the next-to-nothing annual percentage rates that you can get with a new car loan. For example, if you finance $20,000 at 4% APR for 60 months, you’d pay nearly $2,100 in interest charges.
Used — Finding your perfect car in the preowned market can be a challenge. The pool of vehicles for sale is limited, especially in today’s market. For example, if you’re looking for a silver Ford Fusion SEL with black leather interior, you might need to broaden your search parameters or meet with disappointment.
New — Get exactly what you want. If you live in a major metro area, there could be hundreds of new Ford Fusions available. If not, dealers can often make arrangements to have your dream car shipped from another location, or even call the plant to build one to your exact specifications. In addition, a new vehicle gives you access to the latest and greatest technologies available in that model, such as side-curtain airbags or voice recognition features.
Used — Before buying any used car, have a trusted mechanic inspect it thoroughly. Even these steps can’t predict the $500 oil leak that’s ready to spring. On the brighter side, studies such as the Annual Auto Survey from the Consumer Reports National Research Center prove that the general reliability of cars has improved in the last decade, and most should keep purring long after their warranties have expired. For greater assurance, explore historical reliability ratings for specific vehicles through Consumer Reports and other auto services. Or, look into dealers’ or a manufacturers’ certified preowned cars, which have been rigorously inspected and carry a renewed warranty.
New — A new car can be described in three words: peace of mind. A new vehicle is fresh off the assembly line and it comes with the original manufacturer’s warranty, the protection of state and federal lemon laws and free roadside assistance. In all likelihood, you’ll be able to drive it maintenance-free (aside from oil changes) for at least three years.
Used — The lack of depreciation is another favorite point of used car enthusiasts. A new car tends to lose the biggest chunk of value in its first two years. After that, the resale price tag stops dropping so quickly. Buying a used car is a better investment. The argument goes, because the first owner bore the brunt of the depreciation.
New — Depreciation may be less of an issue if you buy a popular car that holds its resale value. For example, cars.com reports that certain brands, such as Honda, Mercedes-Benz, Toyota and Volkswagen, tend to have lower depreciation because of their quality and reliability records.
Used — In general, you’ll pay less to insure a used car compared to a new one. The simple reason is that a used vehicle is worth less. Therefore costs the insurance company less to replace or repair it.
New — Though it’s not the norm, there are cases where choosing a new vehicle could actually save money on auto insurance. If the new model boasts significant safety improvements over its predecessor, for example, insurers could possibly deem it less of a risk and charge lower premiums.
Before making a final decision, call your insurer for an estimate on the cost of coverage for the car you’re considering.