Purchasing a vehicle can be an overwhelming experience. There are so many choices to make, a lot of money on the line, and a laundry list of desires for your new ride. Perhaps even more important than selecting make and model, choosing between buying new or buying used can greatly impact what you get out of your vehicle and your budget. Your options may also be dependent on whether or not you qualify for a loan or if you need to pay in cash. Thinking about buying your next vehicle? We can help you decide between new and used before you even step on the lot.
Are there benefits to purchasing a new vehicle?
New vehicles come with that new car smell, factory warranties, the newest technology, and the security of knowing exactly what the vehicle’s history is. For some people, these can be the most important decision making factors. Most new cars will also have very few repairs in the first few years, so you can focus only on the maintenance of the car. For those of us who know we’re likely to let a problem linger, new vehicles can help ease the burden of repair for a least a couple of years. That said, purchasing a used vehicle does not mean you will be hassled with costly repairs especially when buying from a reputable dealer.
As far as purchase price goes, new cars are typically more expensive, however, the dealer may be able to offer to finance at a lower interest rate which can reduce the amount of interest you pay over the life of the loan. To find out if these deals are truly cost savings, speak with a financial services advisor at the dealership to discuss your concerns and budget.
There are undeniable benefits to buying new, however, the costs do not always measure up to the benefits. When buying a new car off the lot you lose money on it as soon as you drive it off the property. The depreciation of a new car is greatest in the first two or three years, depending on the brand, dropping 10% in value that day you leave the dealership and dropping up to 60% over the next 5 years. Essentially, this means that you are spending thousands of dollars buying new from the start, that you could be saving. Financially, it does not always make sense to buy new unless you have the money you do not mind losing immediately and for very little added benefit.
Besides cost savings, used vehicles give you the opportunity to learn more about your future car, truck, or SUV. Vehicle reviews are often more detailed, customer-focused, and abundant a year or two out of their launch date. Giving other people (critics included) time to form opinions based on experience rather than high-level once-overs.
In addition, insurance rates are typically lower for used vehicles depending on the make and model you purchase. If you are in your early twenties and paying high insurance rates because of your age, this may be significant savings and certainly a sign you should be buying used.
Ultimately, you will need to decide for yourself given your finances, goals, and needs whether a new or used vehicle is best for you. No matter what you decide, being aware of the financial implications is crucial. Make sure you can afford your payments before committing to a long-term financing agreement. There are pros and cons to both arguments, but if cost savings and reliability are of equal importance, a used car makes more financial sense.
Not convinced? Come in and talk to one of our sales associates and learn more about what we can do for you.