Is it best to buy new or used?
If the time has come to purchase a vehicle, there's a big question that's probably at the forefront of your mind: Should you buy a new car or a used car? There's no cut-and-dry answer here. It all depends on your financial situation and your preferences. If you compare the benefits of buying used to the benefits of buying new, the answer should become more clear.
Benefits of Buying New
More Financing Options
Not all banks offer loans for used cars. It's easier to find financing for a new car, and you can often get a lower rate on your loan. Some dealerships also offer cash-back opportunities and rebates on new cars, which are not as readily available when you buy used.
Peace of Mind
Used cars that are only a few years old are not necessarily unreliable as long as they've been maintained properly. However, you don't always know exactly how the previous owner has cared for a used car. With a new car, you won't have these concerns. You have peace of mind knowing that the car has never been driven aggressively or stored incorrectly. You can care for it in the way you prefer from day one, on.
New Technology
Now more than ever, technology is continually changing and progressing. If you buy a used car, you'll be buying a car with technology that's two or three years old. If you buy a new car, you'll get the latest technology. If having the latest tech is really important to you, then this may be a good reason to buy a brand new car.
Benefits of Buying Used
Lower Prices
Generally speaking, you pay less for a used car than for a new car. A car experiences steep depreciation as soon as it is driven off the new car lot. For instance, a $30,000 new car may be worth only $22,000 just six months later! By buying a one- or two-year-old used car, you can save quite a lot of money.
Greater Return When You Sell
Since the used car has already experienced its rapid depreciation, when you decide to resell it, you should be able to recoup a good portion of the money you spent. For example, if you buy a two-year-old used car for $20,000, you may be able to sell it for $16,000 when it's four years old.
Lower Insurance Rates
The higher a car's value, the more it costs to insure. So because used cars are cheaper, they tend to be cheaper to insure. If you'd like to see what the difference is, you can call your car insurance company and ask for quotes for two different vehicles—one that's brand new, and another that's two years old. You may save more than you'd think by buying used.
Ability to Buy a Higher-End Car
Say you have a certain budget in mind when buying a car. If you buy used, you can get a higher-end car for the same amount of money. For example, if you have $30,000 to spend, the only used cars in that range may be mid-size sedans and small SUVs. But if you choose to buy a used car, you can get a luxury, two-year-old SUV for your $30,000!
So, are you better off buying a used car or a new car? It all depends on your goals and preferences. Buying a car that is pre-owned tends to be the better financial option in the long run, but if you really value peace of mind and technology, you may wish to buy new.
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