When shopping for a car, there are a number of decisions you will have to make. One of the first and most important choices is buying a new or used car.
New cars are usually more expensive than used cars, but tend to have fewer mechanical problems. And even if they do break, the cost of repairs is often covered by factory warranty.
Used vehicles, on the other hand, are often much cheaper than new cars. While used cars usually come with some wear and tear and higher mileage, buying a used car can be a smarter financial decision for people on a tight 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.
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Advantages of Buying a New Car
Many drivers like the idea of buying a 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 latest features
As automotive technology advances, cars are becoming more and more useful to drivers. Currently, new cars have computer technology innovations that make the driving experience safer and more enjoyable.
For example, many newer cars have driver assistance features that alert you to potential obstacles around your car, and some features even automatically stop your car 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 on the go.
You may qualify for a good financing offer
As an incentive to buy a new car, dealers usually offer special discounts and financing offers. This may involve cash back or 0 percent financing, making the vehicle a more affordable option.
New cars may have a better warranty
New cars are less likely to be damaged than used cars and most new cars come with a manufacturer’s warranty. Most new car warranties are bumper-to-bumper warranties, which means most common repair costs are covered. You can 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 of choosing the vehicle’s color, finish, accessories, trim levels, and other features. You can also upgrade certain technological features of your car.
Disadvantages of Buying a New Car
Despite all the benefits of buying a new car, there are also some downsides that you should consider. Here are some of the disadvantages of buying a new car:
It’s more expensive
In most cases, new cars are more expensive than used cars. If your budget is tight, a new car may not be in the cards. And even if you can afford a new car, you have to decide if it’s worth the money.
You will pay more in sales tax
Because new cars usually cost more than used cars, you’re also liable to pay a hefty sales tax on your purchase. The only exception is if you live in a state that doesn’t have a sales tax.
New cars often depreciate at a faster rate
Data shows that new cars can lose up to 20 percent of its value within the first year of ownership. If you plan to sell your car at a later date, you may not be able to sell it for a sufficient price to cover your loan debt. You can avoid this with a used car because most of the depreciation has already occurred by the time you buy it.
Advantages of Buying a Used Car
Buy a used car can be an excellent financial decision for many drivers, even if you’re looking for a luxury model. Here are some of the advantages of buying a used car:
Used cars are cheaper than new cars
The biggest benefit of buying a used car is that it usually costs less, especially if you are looking to buy a specific model.
Buying a used car that is several years old can save you thousands of dollars. Plus, most of the depreciation has already been incurred, which may make selling the car easier in the future.
You may find CPO offers
Some dealers offer special offers to customers who purchase certified used (CPO) vehicles. CPO cars are used light vehicles that are several years old and have been reconditioned and repaired by dealers.
Most CPO vehicles also come with a limited warranty covering some repairs and maintenance. Check the website of the dealer you are considering buying to see what offers are available.
Disadvantages of Buying a Used Car
Buying a used car is not the best option for everyone. Here are some of the disadvantages of buying a used car:
Some used cars have outdated features
If you’re looking for special features, such as a high-end stereo system, a panoramic sunroof, or special safety features, then a used car might not be a good choice. Older cars usually don’t have this feature or don’t have certain functions at all that are common in newer cars.
You may have higher maintenance or repair costs
As cars get older, they sometimes need more frequent servicing. When buying a used car, keep in mind that you may end up spending more on maintenance, especially if the car did not receive regular servicing under the previous owner. You may also have to spend money on new tires, brake pads, rotors, or an oil change if the car is out of service.
The car buying process can take longer
Buying a new car is quite simple. You go to the dealer, test drive a few cars, and make your purchase. But if you’re shopping for a used car, you may need to do additional research to find inventory in your area and visit multiple dealers. If the car you want isn’t immediately available, you can wait months to find the one you’re looking for.
Once you’ve found potential options, you’ll then need to review vehicle history reports, schedule inspections, and confirm car titles, all of which can make the process even longer.
Is It Better to Get a New or Used Vehicle?
So, is it better to buy a new or used car? In the end, the decision comes down to your personal situation, priorities and budget. Here are a few things to consider as you weigh your options.
- Your budget: Cars can be very expensive, and if you’re hoping to make a lot of money, you might want to buy a used car. However, keep in mind that the actual cost of owning a car is not just the sticker price on the car. It also includes things like maintenance costs, auto insurance premiums, taxes and fuel 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 goods for your job? Make a list of your most vital needs in a vehicle and use that list to decide whether a new or used car will work better for you.
- Your wish in the vehicle: Some people just want to get their dream car, whatever the cost. Or, if you’ve already decided on a make and model, and you don’t want to drive a used car, a new car would be your best bet.
- Your purchase plan: The price of the new car or used car you buy will depend on how you plan to buy it. If you pay cash, you don’t have to pay interest on the loan. If you plan to finance a car, you will need to factor interest rates into your decision.
Frequently Asked Questions
Check out the answers to some of the most common questions about buying a new or used car:
Why are used cars so expensive?
In recent years, the price of used cars has reached an all-time high. This happened because of the scarcity of supplies and blockages during the COVID-19 pandemic. However, analysts estimate used car prices are down around 2.5-5 percent for new cars and 10-20 percent for used cars towards 2023.
Is there still a shortage of cars?
During the COVID-19 pandemic, there has been a dramatic shortage of new vehicles on the market. One of the biggest causes of the new car shortage is a global shortage of computer chips needed to make new cars. However, the scarcity has started to decreaseeand should continue to increase in 2023.
Will new car prices drop in 2023?
Experts predict that prices for new cars will fall in 2023, but it is possible that some brands will experience a more significant drop than others. If you’re planning to buy a car in 2023, don’t expect to get much done without shopping around, visiting a few dealers, and being flexible about what you want.
Is buying a car in 2023 worth it?
Car prices are still higher than before the COVID-19 pandemic. However, prices are starting to subside. If you need to buy a vehicle urgently, you can still find affordable options, especially if you are open to a used car.
How can you get the lowest price for a car?
Regardless of the car market, it is always possible to find a good price on a vehicle. Here are some suggestions for finding the lowest price:
- Look for low interest rates
- Find discounts and incentives
- Make a large down payment
- Pay for the car in cash
- Search for used cars online
- Consider buying a car from a private seller
Finance & Insurance Editor
Elizabeth Rivelli is a freelance writer with over three years experience in finance and personal insurance. He has extensive knowledge of various lines of insurance, including auto insurance and property insurance. His byline has appeared in dozens of online financial publications, such as The Balance, Investopedia, Reviews.com, Forbes and Bankrate.
