For years, money experts have debated the benefits of buying a new car versus a used one. Traditional wisdom says if you choose a used car, you save money, making it inherently the wiser choice. But in recent years, some financial experts disagreed with that wisdom. With so many great deals on new cars, used might not always be better.
Price isn’t the only consideration in the “new vs. used” argument. If you’re in the market for a vehicle, here are a few things to think about before you start shopping.
Since cost is the most commonly-cited argument in the car-buying debate, let’s tackle that first. Financial experts often point out that a car depreciates in value significantly once it leaves the lot. According to experts, a new car will drop 15 to 25 percent each year, totaling a 60-percent loss in the first five years.
If you’re considering buying new, it’s important to look at your total cost versus what you would spend buying used. This includes the price of insurance plus the total amount you’d pay on a car loan each month. This used car payment calculator can help with that comparison. Also consider the value of a bumper-to-bumper warranty, which can offer peace of mind during those early years.
Consumers generally gravitate toward new models due to reliability. They need the confidence that comes with knowing your car will start when it’s time to go to work. But as Consumer Reports revealed, some older models are actually more reliable than the new vehicles sold today.
Although there are no guarantees with any car, you can increase your odds by looking for a vehicle that gets high reliability ratings in annual reports on the issue. The Kia Niro and Subaru BRZ topped the 2017 list, while the Honda Fit and Pontiac Vibe get high marks as used models.
Of course, there’s no denying the appeal of a new car. Not only do you get that famed new-car smell, but both the exterior and interior are pristine. Someday when you sell it, you’ll have the extra value that comes from having a one-owner vehicle. But the biggest benefit is simply having the knowledge that this car has only belonged to you.
But there are alternatives that can save money while also giving you similar benefits. Certified pre-owned vehicles generally have low mileage and no accidents on record. You’ll also get a warranty and the full detailing that makes your used car seem very similar to a new one. Even if you don’t choose certified pre-owned, though, you can still find a low-mileage used car that may still have both a warranty and the new car smell you’re craving.
For those interested in purchasing a vehicle, it’s important not to limit the search to new or used. Check pricing on various models and make sure you choose the best deal for your money. With rebates and discounts, you may find that you can get a brand new car during a certain weekend of the year for a lower price than you would have spent on something slightly older.