If you’ve decided to go car shopping, it might mean that your old trusty car has become less trusty over the years. Maybe you’ve taken it for repairs so many times that it just doesn’t feel like it’s worth it anymore. Nobody wants to drive a car that could leave them stranded by the side of the road any day.
Or perhaps that’s not the case at all. Maybe your lifestyle has changed, and your old car doesn’t suit your current needs.
Whatever the reasons, now you’re faced with another decision: “Should I buy new or used?” Although not particularly existential, many have pondered this question.
Most articles on financial advice you find on the internet will tell you that it’s always better to buy used. But in reality, there’s no “always” because there’s no fit for all answer. It depends on your particular circumstances. Since cars are not cheap and people usually want to hold on to them for at least three or four years, you want to make sure you choose the right option for you by going over the pros and cons.
Pros and Cons of Buying New
Imagine yourself getting into a brand new car that you just bought. Visualize the shiny new paint, the spotless interior, and feel that new car smell. Now imagine showing it off to your friends and all the “oohs” and “aahs” you’ll be getting. A brand new car certainly has more curb appeal, and you can’t deny that bragging about buying a used car simply doesn’t feel as good.
In the end, we all live in the same consumer culture, and a new car is a powerful status symbol. The fancier, the better because you’re essentially showing those around you that you have life figured out and that you’re doing well.
But even if we set aside that visual allure and social standing, buying a new car still has some significant advantages.
One is that you’ll be the first one to drive it. There’s no wear and tear, and you don’t need to worry about how diligent the previous owner was with maintenance. That’s half the stress of car shopping right there. Now all you have to do is decide which make or model you’d prefer. Let’s say you like Ford cars, and you want to get yourself a 2020 Ford Explorer. You just have to type ford dealership near me into Google and look at the offers like the one from Davesinclairford.com. Once you find a dealership you like, you can just go there and talk to them about financing. Easy. And you already know how much the car is worth. You don’t need to inspect it or take it to a mechanic so you can make sure you’re not getting swindled.
Another advantage is that new cars imply newer and more advanced technology, so you get better safety features and gas mileage.
But the biggest advantage of all is the warranty. Well, since it’s a new car, it’s not likely that it will break down, but if it does, you can have it fixed for free. You also get road assistance, which again you probably won’t be using. The point you’re not likely to have problems with a new car, and if you do, it won’t cost you.
In terms of financing, you also get some advantages because you usually get better interest rates. Moreover, car manufacturers offer cash rebates as an incentive, so if you do your research and you’re good at negotiating, you can bring down the sticker price.
When it comes to disadvantages, we have to mention depreciation. Of course. We all know that as soon as you drive it off the lot, your shiny new car loses 20% of its value. That’s not a nice thought to have. Not all cars depreciate at the same rate, but any way you do the math, buying used is more economical.
Pros and Cons of Buying Used
We’ll start with the most obvious advantage of buying used instead of new: they’re cheaper. Someone else is taking that steep depreciation from the first three years, which means that now you can use it for another three years and get a much better deal than they did.
The lower price also means that you can afford a higher-class car. And did we mention that the insurance is cheaper? If you’re someone in your early twenties, you haven’t had each time to reach a point in your career where you have money to spare. Maybe you’re trying to pay off your student debt. Because of your age, the insurance rates tend to be higher as well. In that case, buying a used car would be the financially sensible thing to do.
But as we mentioned earlier, it may be cheaper, but it’s more of a hassle. The price isn’t just about years and mileage. There are a lot of unknowns, and if you’re not particularly savvy about cars, you might end up being taken for a ride.
Another disadvantage is that, since your main goal is to get a good car for the right price, you need to be flexible regarding color and features. You might not get exactly what you wanted.
When it comes to financing for used cars, the interest rates tend to be higher. It’s harder for the lender to resell a used car if you default on the loan, so to make up for the hassle, you have to pay more.
And lastly, even if you read up on what technical issues you need to look out for and have it checked by a mechanic, it’s a used car, so you’ll still have to set aside some money for the occasional repair. That’s if you get lucky. If you’re unlucky, you might buy a lemon. Then you have to look into lemon laws to see what your recourse is. Keep in mind that for lemon laws to apply, the car you bought has to be under a certain age and number of miles.
In conclusion, buying a used car, as you would suspect, is more economical but that’s only as long as you get a good deal. And to get a good deal, you have to jump through a lot more hoops, making the process more stressful and time-consuming.
Buying a new car is relatively hassle-free, and there are always special offers to bring down the sticker price a little bit. However, they’ll still be more expensive so the kind of car you want might be well beyond your budget.