Is Buying A New Or Used Car Better?

The first decision most consumers have to make when starting their car-buying journey is if they will purchase a new or used vehicle. While this decision may seem easy at first glance, it’s essential to examine the benefits and drawbacks of each option. This article will provide you with all the pros and cons of purchasing new and used vehicles so you can determine which option is right for you.

Advantages & Disadvantages Of New & Used Cars

Benefits Of Purchasing A New Car

  1. Latest Technology
    As technology advances, so do consumers’ expectations of vehicle technology. When you purchase a new vehicle, chances are it will have the latest and greatest technological features built in.
  2. Better Fuel Efficiency
    One of the most significant components of a vehicle’s ongoing cost of ownership is fuel. A recent study uncovered that Americans rank fuel efficiency as the most crucial factor in their decision-making process. Shockingly, 79% of those surveyed ranked fuel efficiency concerns above safety and price. Luckily for consumers, fuel efficiency tends to improve with every new car model because automakers are under constant pressure to increase it. According to Edmunds, by the year 2025, the U.S. government will require that the average vehicle achieve 54.5 mg in combined city and highway fuel efficiency. When you purchase a new vehicle, you can rest assured knowing that the vehicle you are buying has better fuel efficiency than models from previous years. Not only is this better for your bank account, but it’s also better for the environment.
  3. Advanced Safety Features
    Purchasing a new car will provide you with access to the most advanced safety features on the market. Just think of the safety features that are custom today such as laneluxury cars parked in a dealership lot departure warning and blind spot monitoring. These features were not available even a few years ago.
  4. Warranty Coverage
    One of the most significant advantages of purchasing a new car is the manufacturer’s warranty that comes with it. In most instances, these warranties will stand behind your vehicle up to a certain amount of miles or amount of years. According to the DMV, a new car warranty comes with bumper-to-bumper coverage, drivetrain coverage, rust or corrosion coverage, and roadside assistance. This is not something that you will receive if you opt to buy a used vehicle.
  5. Pristine Condition
    If you purchase a used car, you can be assured that you are the first and only owner. The vehicle will be in pristine condition from the inside out, which means you won’t have to worry about scratches, dents, uncorrected part recalls, the previous owner keeping up with routine maintenance, or mechanical issues stemming from an earlier accident.

Disadvantages Of Purchasing A New Car

  1. High Cost
    Perhaps the most significant drawback of purchasing a new vehicle is the cost. While purchasing a new car can negatively impact your bank account, Launch FCU can help make buying a new car more affordable with a new car loan. Our new car loans offer great low rates, flexible loan terms, and monthly payments you can afford. Apply for your new car loan online today to get started!
  2. Faster Depreciation
    New vehicles depreciate quickly within the first few years of ownership. In fact, Edmunds advises that your car will lose value the second you drive it off the lot. While depreciation is an essential factor to keep in mind, it should not deter you from purchasing a new car. If you have every intention of driving your new car until it dies, then depreciation will not matter a whole lot to you. If you plan to trade it in at some point, it’s important to understand the resale value of the vehicles you are interested in. Edmunds’ True Cost To Own® (TCO®) tool can help you compare depreciation for cars you’re thinking about buying.

Benefits Of Purchasing A Used Car

  1. Lower Cost To Buy
    As we alluded to earlier, buying a used car is cheaper than buying the brand new model of the same make and model. For proof, examine the price of lightly used 2015 models on Edumnds compared to their brand-new 2018 counterparts. Traditionally, you can save a ton of money by just going back a couple of model years.
  2. Slower Depreciation
    It’s no secret that used cars depreciate slower than new vehicles. Simply put, the previous owner will have absorbed much of the loss associated with depreciation. Nerd Wallet advises that a new car will lose 20% of its value the second you drive it off the lot. Surprisingly a vehicle could lose an additional 30% of its value by the end of the first year due to mileage and wear and tear. Given these figures, a new vehicle could lose up to 50% of its value after just one year of ownership.
    To illustrate this let’s compare the depreciation rate of a new and used vehicle of the same make and model. Let’s say you purchase a new car for $30,000 and sell it three years later for $15,000, the cost of depreciation would be $15,000. Alternatively, if you were to buy an older, used version of the same car for $15,000 and sell it later for $10,000, the cost of depreciation is only $5,000. Thus, it’s easy to see how purchasing a used car will result in less depreciation cost to you.
  3. Cheaper Registry Renewals
    A significant benefit of purchasing a used vehicle is that the cost of registering it decreases every year. This is money back in your bank account!
  4. Upgrade To Luxury
    If you decide to purchase a used vehicle, you may be able to shop for a higher class of car. For instance, instead of buying a brand new Kia, you could instead opt to purchase a second-hand Mercedes or BMW for close to the same cost, if not less.

Disadvantages Of Purchasing A Used Car

  1. Unknown Vehicle History
    When you purchase a used vehicle, you have to hope that the previous owner took good care of it. Before you buy any used car, it’s essential to get a car history report toman's arm holding car keys out help uncover any significant auto accident or title issues. Information included on a vehicle history report includes: salvage titles, accidents, odometer rollbacks, number of owners, and recall information. Not obtaining a complete history of a used vehicle could result in significant repair costs, or even the need to purchase a new car just months down the road.
  2. Little or No Warranty
    In most instances, used vehicles do not come with extended warranties. If your car does not have a warranty, you will be financially responsible for all repairs.
  3. Can’t Be Picky
    If you decide to purchase a used car, you will not be able to be as picky about the features or color as you would if you were buying a new vehicle. Purchasing a used vehicle may require you to compromise on some features that are not essential to the vehicle’s performance. 

Let’s Wrap It Up

We’ve provided you with a lot of information that should help you determine if purchasing a new or used vehicle is right for you. We’ll leave you with a summary of the benefits and drawbacks of both new and used cars.

Advantages Of Purchasing A New Car

  • Latest Technology
  • Better Fuel Efficiency
  • Advanced Safety Features
  • Warranty Coverage
  • Pristine Condition

Benefits Of Purchasing A Used Car

  • Lower Cost To Buy
  • Slower Deprecation
  • Cheaper Registry Renewals
  • Ability To Upgrade To Luxury

Disadvantages Of Purchasing A New Car

  • High Cost
  • Faster Depreciation

Disadvantages Of Purchasing A Used Car

  • Unknown Vehicle History
  • Little Or No Warranty
  • Not Able To Customize

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