One of the many questions every car buyer faces is whether to invest in a new vehicle or buy one that’s used. Listed below are the advantages and disadvantages of buying a new car v/s a used one:
Buying a New Car
Advantages:
There’s no history
When you purchase a new car, you don’t have to fret about whether any previous owners failed to do periodic maintenance (like regular oil changes), had accidents, or mistreated the vehicle. You also don’t have to worry about any wear and tear, like you would, with a used car. Having come straight to the dealership from the factory, a new car has very few miles on the odometer.
New cars are cheaper to finance
Lenders carefully consider the risk factor when they decide to loan you money and charge you interest. The value of their collateral (your car) is known with new cars. With used cars, there’s a higher risk of the financing not being paid in full, and there’s more uncertainty about the collateral value. Due to this increased risk, lenders usually charge used car buyers higher interest rates on their car loans.
Some other advantages are:
– You can get new car deals
– You can get the latest technology in the marketplace
– New cars are more fuel-efficient
– You get complete warranty protection
Disadvantages:
They’re expensive
Purchasing a new car is one of the most expensive ways of getting behind the wheel. What makes the difference even more pronounced is the greater insurance cost for higher-value cars. Additionally, once the warranty coverage expires, it becomes more expensive to repair today’s cars thanks to the advanced technology used.
You have to buy them from a dealer
Unlike used cars, which can be bought from a variety of sources (like private parties, car dealers, and used car superstores), new cars are exclusively sold through franchised new car dealers. When you make a purchase from a dealer, a portion of the price you’ll pay will go towards the overhead that keeps the dealership functioning.
Other disadvantages are:
– You have to pay lots of sales tax
– New cars are more expensive to insure
Buying a Used Car
Advantages:
In many ways, they’re less expensive
Buying a used car will save you money, when the tax collector comes calling, and you purchase auto insurance. Since the price of the car is lower, the total amount of interest you’ll pay over the course of the loan will be lower.
You don’t take a massive depreciation hit
The value of a new car begins to drop the moment you drive it off from the dealer’s lot. This is known as depreciation. During the first few years of ownership, the value of the vehicle drops, and much less depreciation occurs later in the car’s life. When you buy a used car instead of a new one, the previous owner has already absorbed the huge depreciation hit, thereby giving you a much lower-priced car with slower depreciation.
Some other advantages are:
– Your loan and financing is less likely to be underwater
– You can buy a better car in your budget
– You’ll know what problems to avoid
Disadvantages:
You’re buying a car that someone has discarded
No one wants to purchase someone else’s discarded car or buy all the problems the previous owner didn’t want to deal with. While the risk of buying a used car can be reduced, by getting a pre-purchase inspection and studying the vehicle’s history report, it can never be eliminated.
You can never truly know its history
Even though vehicle history reports have become thorough, they’re not perfect. Something that has happened recently may not be shown in the reports and you’ll never know how easy or hard the vehicle was driven (unless an accident occurred).
Other disadvantages are:
– Most used vehicles are sold as it is
– Usually, there’s no warranty coverage
– Used cars may require higher-priced financing
