New vs. Used

This is an age old question and the answer to the question varies depending on a number of factors such as our personal circumstances, your driving needs, and many other factors. But when approached from the vantage of financing the results can be very interesting.

New Car:

Advantages

The major advantages of buying a new car are as follows:

  • You will be the first owner
  • Full factory warranty
  • Lower finance rate
  • No mileage limits
  • Ownership and equity in the vehicle

Disadvantages

The major disadvantages of buying a new car are as follows:

  • Higher monthly payments
  • Higher insurance rates
  • Owner usually has to make a down payment
  • Owner takes a hit for the depreciation

Used Car:

Advantages

The major advantages of buying a used car are as follows:

  • Lower purchase price
  • You do not have to take the hit for the initial depreciation
  • Cheaper insurance
  • You pay less for the previous year's car with the same features

Disadvantages

The major disadvantages of buying a used car are as follows:

  • May have no miles (or very few) left on factory warranty
  • You may spend more money on an extended warranty
  • Car is older
  • Parts are older
  • Unknown maintenance habits of previous owner
  • Higher finance rate

Conclusion

It is not recommended that a person risk their savings or budget to buy a new car. If higher payments cannot be comfortably accommodated, a quality used vehicle is a wiser choice. If you can afford a new car, here is the bottom line: Today's cars are built to last with longer warranties being offered. After five or more years of ownership, depreciation becomes relatively unimportant. If you can afford a new car and want one, go for it! Regardless of which type of car you purchase, it should fit your needs: Is it comfortable? Does it drive well? Is it practical? Most importantly, you should take the time to shop around. Be prepared when purchasing a car.