If you’re in the market for a new car, it’s important to weigh all options carefully. A car is a major investment, whether it’s new or used. There are pros and cons to both new and used cars which are worth exploring, along with the most suitable make and model. This can help you choose the right fit for your budget and lifestyle.
Buying a car not only incurs a significant up-front expense in many cases, but it will also take a toll on your finances for years to come. It’s helpful to look at the pros and cons of both new and used cars to determine which will be the most financially advantageous solution.
Buying a New Car
There’s nothing like the satisfaction of buying a brand new car, but there are also financial advantages. When you buy a new car, it will usually come with a manufacturer warranty. This allows you to focus on maintaining and servicing your car to keep it in the best possible shape.
Buying new allows you to browse through all of the latest options on listings sites to find the model with the best fuel economy and value for money. When buying used, you may not have so many options and could end up paying more on fuel over time.
Dealers may offer you financing at lower interest rates for new cars, which can save you money on a long-term basis.
However, the major disadvantage associated with purchasing a new car is that it will immediately drop in value. New cars take the biggest hit in terms of depreciation over the first three years of ownership. You can mitigate this by looking for a car that you intend to keep for ten years, but depreciation will always be an issue with buying new.
Buying a Used Car
In many ways, buying a used car and selling your old one can be seen as a better investment. Because the car has already dropped in value, you won’t be hit with depreciation to the same degree as you would with a new car.
You might be able to afford a nicer car when you buy used. For example, a spacious used Mercedes Benz may cost the same as a brand new Kia or Skoda super-mini, but give you more for your money. This also means that when the time comes to sell your car down the road, you may be able to get a similar price for it as what you originally paid.
It’s still possible to obtain financing for a new car through your bank, and due to lower starting prices you may be able to finance your car using savings or cash. This could save you a great deal of money on interest.
One of the main issues that used car owners must contend with is reliability, however. Because the car is older and has some miles on it already, you may need to take it in for more frequent repairs and servicing. This can add up over time. Yet for a car that’s only slightly used or still protected by a manufacturer warranty, this won’t be such a problem. To offset the cost of repairs, it’s a good idea to budget for them by setting money aside each month.
There are advantages to purchasing both new and used cars. You’ll need to take a close look at your budget, your long term goals, and your financing options before you make a decision.