Need a new set of wheels? Consumers needing a new vehicle should consider the pros and cons of buying a new car or a used car as well as how much car they can afford.
Comparison Shopping: New Car or Used Car
Are you wondering whether you should buy a shiny new car or a pre-loved model? There are some definite advantages to each path. Let’s discover whether it’s better to buy a new car or a used car.
Depreciation of New & Used Cars
According to CARFAX.COM, depreciation significantly impacts the value of new cars. The first 10% is lost as soon as you drive away with your new car. But it doesn’t stop there! Another 10% comes off at the end of the first year. You can count on depreciation for the first four years of owning a new car.
A used car can also suffer from depreciation. If you buy a newer used model, it will still face significant depreciation in the initial four-year time span.
Car Repairs for New & Used Cars
Car repairs tend to be more expensive with used cars. They have seen more road action. You also never know if the previous owners took good care of the car or not.
If you don’t have money set aside for car repairs, an older used car could be a riskier investment.
Many times new cars come with some basic maintenance contracts, like free oil changes. They are also simply brand new and haven’t been worn down in practically anyway. Major car repair troubles should also be covered under warranty.
Other Considerations for New & Used Car
Financially, newer used cars tend to be better investments than new cars. However, there are other things to consider in your decision.
- Do you have a demanding commute?
- Are you driving locally or expect to travel long distances frequently?
- Do you have available funds for major car repairs?
- Do you frequently change vehicles or keep them until they die?
- Do you want a car loan or want to stay debt free with a smaller purchase price?
A car is a major investment whether it’s new or used. Keep in mind the monthly costs of car loans and insurance premiums. These tend to be higher with new cars.
Downgrading your vehicle can be one way to save money, but don’t sacrifice too much where you will face frequent repairs and other unexpected hits to your budget. Stay within your car budget and drive happy!