Should You Buy a New or Used Car?
When shopping for a car, there are a number of decisions you have to make. One of the first and most important choices is whether to buy a new or used car.
Brand-new cars are usually more expensive than used cars, but they tend to have fewer mechanical issues. And even if they do break down, repair costs are often covered by the factory warranty.
Used vehicles, on the other hand, are often much less expensive than new cars. While used cars typically have some wear and tear and a higher mileage, buying used can be a smarter financial decision for people on a budget.
If you’re deciding between a new and used car, it’s important to consider your unique needs and weigh the pros and cons of each option.
Ready to buy a car? Easily compare auto lenders below for new and used cars.
Your one-stop shop for comparing car loans.
Enter your information to see your auto loan options.
Pros of Buying a New Car
Many drivers like the idea of buying a brand-new car. They have the latest safety features and technology and are in pristine condition inside and out. Here are some of the biggest advantages of buying a new car:
New cars have the newest features
As automotive technology advances, cars are becoming more and more useful for drivers. Nowadays, new cars have innovative computer technology that makes the driving experience safer and more enjoyable.
For example, many new cars have driver assistance features that alert you to potential obstacles around your car, and some features even stop your car automatically to avoid a collision. Of course, you can also use voice commands to make calls, send text messages, navigate, and do a million other things, all while on the go.
You may be eligible for a great financing offer
As an incentive for buying a new car, it’s common for dealerships to offer special discounts and financing deals. These may involve cash back or 0 percent financing, making the vehicle a more affordable option.
New cars might have a better warranty
New cars are less likely to break down than used ones and most new cars come with a factory warranty. Most new car warranties are bumper-to-bumper warranties, meaning most common repair costs are covered. You may also get free roadside assistance with your purchase.
You can customize the vehicle
When you’re shopping for a new car, you often have the option to choose the color, upholstery, accessories, trim level, and other features of the vehicle. You can also upgrade certain technological features of the car.
Cons of Buying a New Car
Despite all the benefits of buying a new car, there are also some downsides you should consider. Here are some disadvantages of buying a brand-new car:
It’s more expensive
In most cases, new cars are more expensive than used cars. If you’re on a tight budget, a new car might not be in the cards. And even if you can afford a brand-new car, you’ll need to decide if a new car is worth the high cost.
You will pay more in sales tax
Because new cars are usually higher in price than used cars, you’ll also be responsible for paying hefty sales taxes on your purchase. The only exception is if you live in a state that doesn’t have sales tax.
New cars often depreciate at a faster rate
Data shows that new cars can lose up to 20 percent of their value within the first year of ownership. If you plan to sell your car later on, you might not be able to sell it for enough to cover what you owe on the loan. You can avoid this with a used car because most of the depreciation has already occurred by the time you buy it.
Pros of Buying a Used Car
Buying a used car can be an excellent financial decision for many drivers, even if you’re looking for a luxury model. Below are some of the advantages of purchasing a used vehicle:
Used cars are cheaper than new cars
The biggest benefit of buying a used car is that it’s usually cheaper, especially if you have your heart set on a particular model.
Purchasing a used car that’s a few years old could help you save thousands of dollars. Plus, most of the depreciation has already happened, which can make it easier to sell the car in the future.
You might find CPO offers
Some dealerships offer specials to customers who buy certified pre-owned (CPO) vehicles. CPO cars are lightly used vehicles that are a few years old and have been reconditioned and repaired by the dealer.
Most CPO vehicles also come with a limited warranty that covers some repairs and maintenance. Check the website of the dealership you’re considering buying from to see what deals are available.
Cons of Buying a Used Car
Buying a used car is not the best option for everyone. Here are some of the downsides of getting a used car:
Some used cars have outdated features
If you’re looking for specific features, like an advanced stereo system, a panoramic sunroof, or special safety features, used cars might not be a good option. Older cars typically lack these features or lack certain functionalities altogether that are common in new cars.
You might have higher maintenance or repair costs
As cars get older, they sometimes require more frequent service. When buying a used car, keep in mind that you might end up spending more money on maintenance, especially if the car did not receive regular service under the previous owner. You might also have to spend money to get new tires, brake pads, rotors, or an oil change if the car is not up to maintenance.
The car buying process could take longer
Buying a new car is pretty simple. You go to the dealership, test-drive a few cars, and make a purchase. But if you’re shopping for used cars, you may need to do some extra research to find inventory in your area and visit multiple dealerships. If the car you want isn’t immediately available, you could end up waiting months to find what you’re looking for.
After finding potential choices, you’ll then need to review the vehicle history report, schedule inspections, and confirm the car’s title, which can all make the process take even longer.
Is It Better to Get a New or Used Vehicle?
So, is it better to purchase a new or a used car? Ultimately, the decision comes down to your personal situation, priorities, and budget. Here are some things to consider as you weigh your options.
Your budget: Cars can be very expensive, and if you’re hoping to score a great deal, you’ll probably want to buy used. However, keep in mind that the true cost of car ownership is not just the car’s sticker price. It also includes things like maintenance costs, car insurance premiums, taxes, and gas prices.Your vehicle needs: Think about what type of car you need for your lifestyle. Do you need a car with a certain number of seats? Do you need a truck to transport items for your job? Make a list of your most vital needs in a vehicle and use the list to decide whether a new or used car will work better for you.Your wants in a vehicle: Some people just want to get their dream car, no matter the cost. Or, if you’ve decided on one make and model, and you don’t want to drive something that’s pre-owned, a new car is going to be your best option. Your purchase plans: The price of the new car or used car you buy will depend on how you plan to purchase it. If you pay cash, you won’t have to pay interest fees on a loan. If you’re planning to finance the car, you’ll have to factor interest rates into your decision.
Frequently Asked Questions
Check out these answers to some frequently asked questions about buying a new or used car:
Why are used cars so expensive?
In the past few years, the cost of used cars has reached an all-time high. This was due to supply shortages and blockages during the COVID-19 pandemic. However, analysts expect the price of used cars to drop by roughly 2.5-5 percent for new cars and 10-20 percent for used cars heading into 2023.
Is there still a car shortage?
During the COVID-19 pandemic, there was a dramatic shortage of new vehicles on the market. One of the biggest causes of the new car shortage was a global shortage of computer chips necessary to build new cars. However, the shortage has started to ease, and should continue to improve in 2023.
Will new car prices go down in 2023?
Experts are predicting that new car prices will go down in 2023, but it’s possible that some brands will see more significant drops than others. If you’re planning to purchase a car in 2023, don’t expect to get a great deal without shopping around, visiting a few dealerships, and being flexible on what you want.
Is buying a car in 2023 worth it?
Car prices are still higher than they were before the COVID-19 pandemic. However, prices are starting to ease. If you need to purchase a vehicle soon, you can still find an affordable option, especially if you’re open to a used car.
How can you get the lowest price on a car?
Regardless of the car market, it’s always possible to find a good deal on a vehicle. Here are some suggestions for finding the lowest price:
Look for a low interest rateFind discounts and incentivesMake a large down paymentPay for the car in cashSearch for used cars onlineConsider buying a car from a private seller
Finance & Insurance Editor
Elizabeth Rivelli is a freelance writer with more than three years of experience covering personal finance and insurance. She has extensive knowledge of various insurance lines, including car insurance and property insurance. Her byline has appeared in dozens of online finance publications, like The Balance, Investopedia, Reviews.com, Forbes, and Bankrate.
