Navigating the Auto Market: New or Used – Which Is Right for You?

Do you want a new or used vehicle? It’s usually the first question you will face when you begin shopping for a car. Used vehicles are generally less expensive than a similar model in new condition, but new cars have their own advantages that used cars lack. There are pros and cons to both sides, so the right answer for you depends on what you’re personally looking for in a new-to-you car.

Used Car Pros

The most obvious advantage of a used car is the relatively low cost compared to new cars. Used cars will also have cheaper insurance rates compared to a brand-new car. Because of the increased affordability, you may even be able to afford luxury models or additional upgrades that wouldn’t be possible with a new car.

Like any other asset, cars will also depreciate in value. However, used cars depreciate at a much slower rate. A new car can lose up to 20% of its value in the first year alone. Meanwhile, a used vehicle may lose 10% or less of its value, making it the smarter choice if saving money is the goal. If you choose a reliable enough used vehicle, it can last a lifetime.

Used Car Cons

When shopping for a used car, your choices will be limited to what’s available in your local market for your given budget. Buying used also requires you to spend a little extra effort researching the vehicle’s history to ensure you are getting your money’s worth. Even if you buy a safe, reliable car in good condition, you may face higher maintenance and repair bills than if you’d bought a brand-new car.

New Car Pros

Many people find that the reliability of a new car is well worth the cost. A car with no previous owner is still in pristine condition with virtually no wear-and-tear, so its individual parts are unlikely to fail. If you do experience mechanical problems with a new car, it will probably be covered by the manufacturer’s warranty. Reliability aside, new cars also come with the latest technology and safety features. You also have more opportunities for customization with a new car, such as choosing your exterior color or trim.

New Car Cons

The main disadvantage of buying a new car is the hit to your wallet. The sticker price is simply higher. Monthly payments for a new car are typically more expensive than the same vehicle in used condition, and insurance rates tend to be higher as well. You will also retain less of your vehicle’s value due to the higher depreciation rate of new cars.

Cost Differences Between New and Used

With very few exceptions, a used car is cheaper than a new car. According to Kelley Blue Book, a three- to four-year-old Honda Accord is $5,000-$8,000 cheaper than the newest model, which can amount to a difference of hundreds of dollars for your individual monthly payments. However, you should note that interest rates for used cars tend to be higher, along with the cost of repairs and maintenance.