Buy A New Car or A Used Car? Pros & Cons

Jun 25, 2015

When it comes to purchasing a new vehicle, there are a ton of questions that you have to ask yourself. What kind of car? Color? Model? Where should you buy it? And probably most importantly: new or used. Here are a list of pros and cons of buying a new car and a used car.

Buy A New Car

Pros

Technology: One of the biggest pros of purchasing a new car is having the latest and most advanced technology. Navigation systems, Wi-Fi, rear view camera, better MPG, cars that parallel park themselves (don’t you wish you had that when you failed your driving test three times at 16?), the list goes on.

Warranty: Warranties come with most vehicles. Three years or 60,000 miles manufacturer’s warranty and 10-year, 100,000 mile powertrain warranty are pretty standard for new vehicles. This’ll keep you and your investment safe. [*All purchases at Nutley Kia include a 24 month/24,000 mile no charge maintenance]

Interest Rate: Low interest rates are awesome, and they’re traditionally lower when you take out a loan for a new car.

Cons

Depreciation: Buying a car, new or used, is a serious financial commitment, matched with serious depreciation of value. It’s estimated that a new vehicle loses 11% of its value the moment it drives off the lot and over 40% by the time it’s paid off in five years. While taking good care of your vehicle can limit depreciation and maintain the value of your investment, more expensive cars depreciate faster than less expensive vehicles. [*Understanding the True Cost of Car Ownership]

ROI: Due to high depreciation new vehicles have a very low return on investment (ROI). With “very low” meaning you will not make any profit by investing in a new car. Regardless of where, when, or how you purchase your vehicle, it’s a simple fact that you’re not going to get back what you paid for your purchase. However, this financial loss is less with less expensive vehicles.

Insurance: Dealerships and finance institutions when purchasing a new vehicle require full coverage auto insurance. Because premiums are based on factors such as vehicle and driver age, coverage for younger drivers looking to buy a new vehicle will have to pay a higher premium than more experienced drivers.

Buy A Pre-Owned Car

Pros

Price: Buying a used car allows you more price negation than buying a new vehicle. Also they’re usually cheaper than new vehicles.

Depreciation: Earlier we mentioned how vehicles depreciate in value, losing a substantial amount of value as soon as they leave the lot. One of the pros of getting used cars is that their value depreciates much slower, so you lose less of your initial investment.

Warranty: Used cars from dealerships come factory-certified, with the same warranty you’d get from the manufacturer as buying a new car. This ensures that your vehicle will remain properly inspected and certified by manufacturer representatives.

Cons

Auto Dealership: Unless you know the person you’re buying a used car from, you most likely will have little to no knowledge about what kinds of wear-and-tear your new purchase has been through. [*Learn more about how to choose the right car dealer]

Safety: Older used cars lack modern safety features that come standard in new vehicles. However, with proper regular inspections you can ensure your used car stays safe for you and your family!

Maintenance: Keeping a used car on the road will definitely cost you more in the long run than a new car would. Older vehicles with more miles need more work done to keep them running. Knowing a used car’s history will help prepare you for the repairs your vehicle will need.

For more information about car buying, download our car-buying guide now.

Sources:

http://www.cars.com/go/advice/shopping/cpo/stories/story.jsp?story=prosCons
https://smartasset.com/auto/the-pros-and-cons-of-buying-a-new-car
https://www.infinityauto.com/knowledge-center/smart-saving-tips/new-vs-used-car-making-best-decision