When it’s time to buy a car, you have an almost overwhelming variety of choices available to you. Not only do you need to pick the make and model of your car, you also need to decide if you want to buy a new or used car.
Buying a car is a decision that can make a big difference in your finances over the next several years. It is important to realize that buying a car is NOT an investment. They lose value over time and take money to maintain as well.
When choosing what kind of car to buy, it’s always important to take your current and future finances into account.
While new cars bring a lot of feature advantages, they are much spendier than used models. On the flip side, a very old used car will likely bring almost no return at all. Read on to learn more about which decision is right for you.
It comes with a warranty
One advantage of buying a new car is that you are buying a car that generally comes with a warranty. Most new cars will also require very few repairs in the first few years, so you can focus only on the maintenance of the car.
The dealer wants to sell
The dealer may also offer financing at a lower interest rate, which can reduce the amount of interest you pay over the life of your loan.
It’s the best on the market
Another advantage of new cars is that they have the latest technology, which means that you’d be hard-pressed to find cars with better gas mileage and lower emissions.
You may be able to buy a hybrid and reduce the amount you spend on transportation each month. Additionally, the new cars tend to hook up to your phone and other devices with more ease. You can even choose the features you’d like in your car.
It drops value fast
The biggest disadvantage of buying a new car is that you lose money on it as soon as you drive it off the lot. A new car takes its biggest depreciation in the first two or three years. This means that you are basically throwing away several thousand dollars that you will never be able to get back.
Financially it does not make a lot of sense to buy a new car unless you have money you do not mind losing.
You’re getting the first version
Another disadvantage of buying a brand new model is losing out on possible upgrades such as a different engine or altered design intended to fix any bugs noticed during the first year.
It won’t drop value as quickly
The biggest advantage of buying a used car is that you let someone else take the biggest depreciation hit on the car. With good maintenance, you may be able to sell your car for nearly the same amount you paid for it in the next few years.
You can still find good financing options through your local bank, and because you are not losing the money on depreciation, you may come out ahead of that zero interest loan that you would take out on a new car.
You have more time to think
When you buy a used car, it is easier to save up and pay cash. You can also review the consumer reports and choose a model that has been performing well.
Lower insurance rates
Another advantage is that depending on the model, your insurance rates may be lower on a used car as opposed to a new one. If you are in your early twenties and paying high insurance rates because of your age, this may be significant savings.
The biggest disadvantage of buying a used car is that it may not be as reliable or you may need to do more repairs on it. However, you do have the option of buying a certified pre-owned car through several different car companies.
It’s important to say that a used car doesn’t imply it’s a junker. You can buy a used car just a few years old. As technology has improved, cars have become more reliable and many models do not need major repairs until they are well over 100,000 miles and close to ten years old.
This means that you can buy a car that is three years old and sell it in five years, and you may not need to do any major repairs on it.
It’s not customizable
Another disadvantage of buying used is that you may have to compromise on the color of the car, or features, in order to get the one with the better history and mileage. When shopping for a used car, you need to be more flexible and more patient as you hunt for a car.
While we hope that this article has given you some good ideas, you’ll need to decide for yourself what option fits you best.
No matter what you decide, we suggest either paying cash or making sure that you can afford the car you want. In the end, your financial capability and preference will really dictate the kind of vehicle purchase you should make.
For the person with a stable income and specific preferences:
Buying new will get you the features and color you desire. If you’ve got a stable job, security of tenure, a computation that shows factoring in inflation and cost of living, and you can keep your head above water comfortably for the next three to five years, go for it.
For the person trying to find the middle ground:
A used car could be the way for you. There is a bit of a risk not fully knowing the vehicle’s history, but you can have an expert with you to inspect the vehicle fully. Although this isn’t foolproof because not every problem is apparent with a visual check or even a test drive, most likely major problems will be spotted.
Look for a used car that is only a few years old and well taken care of. With proper care and maintenance, you should be able to sell the vehicle for a good price after some years.
For guidance on car care read this article on how to extend the life of your car.
The experts at American Auto Care/Automotive Service and Repair are here to help keep your vehicle in tip-top shape. With our positive local reputation, you can be sure that your car, new or used, is in the best of hands.
For further advice on buying a new or used car or schedule a maintenance visit, call us now at (951) 461-2507.