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Should I Buy a New or a Used Car?
There’s nothing quite like the feeling of getting behind the wheel of your new car but that doesn’t mean it can’t feel just as good, if that new car is only – new to you. Since brand new cars lose about 40% of their value within the first 3 years, it may seem to make more sense, in terms of a lasting investment, to buy your next car used.
But that choice is entirely dependent upon your individual set of circumstances and needs. Conventional wisdom has long held that keeping your current car, or buying a previously owned but well-maintained vehicle, is often the most financially sound decision you can make. With the current shift in the auto marketplace though, brought on by the economic downturn, there is no longer a clear-cut winner in the new versus used car debate.
Your best bet is to carefully assess your needs and concerns before entering the marketplace so that you are better equipped to decide which is right for you.
Pros New Car
Less chance for expensive repairs not under warranty.
More safety equipment and better safety records.
Better reliability at the start of ownership.
Deals are good – industry sales are down from 17.3 million just 10 years ago, to 11.5 million last year. This means car lots are hungrier for your sale.
0% financing for some qualified buyers means that buying your new car is the same as cash.
Still you have to weigh those benefits against those offered by purchasing a used vehicle.
Pros Used Car
Lower value depreciation.
Lower initial purchase price.
Lower registration and license fees.
Lower insurance premiums.
Low to no financing necessary.
No extra charge for vehicle options.
Before deciding on a new or used car, be sure to consider your specific needs in buying a vehicle. Decide things like how long you plan to keep the car (if buying new you should be looking at least 10 years.) If you commute or work in outside sales where your car’s reliability is crucial to your earnings, it may be in your best interest to purchase something new. Conversely, if there is any possibility of future downsizing in your industry, it may be smarter to keep financing costs down, with one less payment a month, should the unthinkable happen.
Also, keep an eye on financing rates. According to MoneySense Magazine, “If you’re financing, look at the cost over the life of your loan. With so many new cars offering 0% financing, paying 12% on a used car may wipe out the savings you’ve made ‘eliminating the depreciation factor’ by buying used.”
If you do decide to follow the conventional wisdom on this and buy used, MoneySense recommends consulting with publications like Consumer Reports, Phil Edmonston’s Lemon-Aid and Dealfinder to help you make an informed use
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