Buying a New car vs a used car

One of the first decisions to make when deciding to buy a car is whether you want to buy a new or used car. For those that are interested in some make and model that has just come out, the decision is easy. It’s going to be a new car. However, for the vast majority of people, the decision is a critical one. Which one is the right choice when you are buying a car?

Make and Model - When looking at new versus used cars when deciding on which make and model of car you are going to choose, you get more for your money when you buy a used vehicle. After all, the price of the new car is going to be substantially higher than the same vehicle a couple of years later. You can also choose a loaded or bigger version of that car for about the same price as what you would pay for a new car two to three years ago. However, the new car does offer you that brand new car smell. And that has value to a lot of people. It also is a worry free vehicle since no one has driven it yet and it’s protected by warranty. For some new cars that can range from 36,000 miles/3 years to as many as 100,000 miles/10 years depending on make and manufacturer.

Budget – For most, how much money they have to spend and what they can afford in monthly payments is the first decision. A new car can depreciate 25 - 40% as soon as it is driven off the lot. That means that if you have not put at least that much down on the car when you buy it, you are in no position to sell the vehicle for awhile. You would have to wait at least until the depreciation slows down around the 3 year mark. If you are making car payments, a used car payment of the same amount allows you to get more car for the money. If that’s not of interest, it also allows you to have lower car payments for the same vehicle that has been driven for a couple of years.

Insurance - New car insurance is going to be more than that of a used car. The value of the car is one of the factors that comes into play when determining your insurance rates. Obviously new and more expensive cars carry a higher value than used cars. Make sure that you factor that into your budget when making a choice between the two types of cars.

Maintenance - When you buy a new car you do not need to worry about how the car has been treated or what kind of shape it is in. You know no one else has owned it and that you are well covered by warranties. That gives you a safe and secure feeling about the car as soon as you take ownership. With a used car you never can be quite sure. Despite what a dealership or owner says, there might be issues or surprises that you are not aware of. In addition, due to the fact that the car has a couple of years wear, the likelihood of maintenance issues will come up sooner than if you bought a new car simply due to the fact that you are closer to the 100,000 mile mark.

Bells and Whistles – When you buy a new car, you know that you have the choice of every current add-on that there is in the market. From GPS and navigation systems to surround sound and video players, new car options are incredible. Older model cars are likely to have less of those options included in them. So if those features are of importance, you might want to look at new cars. Or, explore used cars that are loaded and higher end models. Some of them might have many of the features as well.

Choosing to buy a new car versus a used car is a very individual decision. However, using the factors above, you can come closer to determining which of the choices is best for you and your pocketbook.

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