Buying a New Vs. Used Car: What’s the Verdict?
The first step in the tricky dance of shopping for cars is figuring out if you should buy a new or a used one. First, you need to ask yourself: how much money are you willing to spend? Do you have the funds for the large price tag of that new car smell, or is the down payment on a used one going to drain you dry? Will you need to take out an auto loan in order to even consider either of these options? Which option will benefit you most in accordance with that auto loan? Should you use a payday loan for a down payment? While the first question is solely yours to answer, let’s start off by addressing the pros and cons of a new car.
Is Newer Really Better?
No Skeletons in This Closet
Buying a new car comes with quite a few perks. First off, shopping is a little more streamlined, and therefore easier. If you don’t feel like hunting through every car sales lot in Mississippi and you know what you’re looking for, then you can sit in the comfort of your home and shop online, even customize your car, without concern over whether it has any immediate defects. The cars you’re looking at are fresh off the press, and, provided you’ve done your research, are as perfect as any car can be. You won’t have to go to a mechanic to get it evaluated or spend extra time digging into the history of it like you would a used car, and any problems you might have are usually under warranty for at least three years depending on your contract. So, no mysterious stains except the ones you make.
Financial Elasticity
You have a larger pool payment options to pick from when purchasing a new car vs an old car. If you plan your shopping for the end of the year, near the time automakers are trying to reach quotas and offer juicy deals, you might be able to snag something nice. Dealers and manufacturers can offer cash rebates and other incentives, and if you are taking out an auto loan, then the interest rate will usually be lower than that of a used model.
Fun Gadgets
Newer cars also usually mean you have newer technology. There are a lot of wonderful features that make driving a luxury rather than a hassle, such as auto-connecting Bluetooth, backup cameras, heated seats, and better security systems. If this is an important piece of the equation for you, then you need to remember that buying a used car will most likely entail a car that does not include the fancy features.
The Cons: There are Some
Depreciation for a new car can pack a punch. Based off of Carfax’s data, it seems that you can lose as much as ten percent value of your new car just in the first month that you drive it. You might sell your car after fifteen years at half the price you originally bought it, so you need to consider if the perks outweigh this potential lost value, especially when compounded with what you might owe towards an auto loan.
Insurance might also be higher, but that also depends on the make and model of the car—meaning that you might pay a lot on an old car as well. There’s also the matter of price: can you afford the shiny rims and rich leather interior? There’s always going to be a bigger cost with a new car, and while there may be deals and options involving payment plans, all of that is still coming out of your pocket.
Buying New vs Old Cars: Age Before Beauty
Let’s consider the better parts of purchasing a used car because there are quite a few.
Depreciation? What Depreciation?
When you buy a used car, you will definitely be buying it at a lower cost than a new one, which right off the mark saves you a considerable amount of money, not to mention the depreciation I mentioned before? It will usually be absorbed after the first few years of ownership, so you don’t have to worry about spending and losing so much.
The Little Things Matter
The little things that come after that initial purchase, like insurance and sales tax, will typically be less with older cars. The important thing to remember is to do your research before purchasing anything and to do a little digging on the reviews and rankings of used models. Also, what are the term differences between a used car’s auto loan and one you might receive through the purchase of a new car?
Old is Now New!
A lot of the cars you see in used lots are not going to be as ancient as you think. Some might even have a few of those cool gadgets we spoke about before! Those features do not add much to the value of your car in the long run, which means you are purchasing them for cheaper when you look at used cars. Another important thing to remember is that, if you are taking out an auto loan, this will give your wallet some room to flex; however, make sure you understand what your specific auto loan entails, and educate yourself before jumping into something risky, whether you’re buying a new or old car.
The Cons: Old Cars Are Old
Shocker, I know. You’re going to have a history with the car you buy, and the more miles it has, the more likely some maintenance will be required. Regardless, you will be closer to a required repair than with a new car, and you won’t have a warranty to help back you up—this can be very costly if you jump into the carpool without looking. You will also have to consider your down payment, which might wind up costing you too much at once, whereas the options provided by a new car can help.
Decision Time
What it really comes down to is this: Do your research for the class of car you’re looking for, listen to what your savings are whispering to you, and remember that with either choice there are both benefits and detractors. There is not any one way to go, as much of your decision-making will be subjective. Buying new vs old cars can be overwhelming, so make a checklist starting with what you have and what they have, then consider the rest.
When facing a one-time financial emergency, finding loan companies near you could offer some relief. Consider the benefits and consider doing your own research to see if it’s worth it for you and your family to begin your new chapter when you get a loan.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.