Buyer Information - New or Used Car?
Your next vehicle -- new, or used?
The average used car costs less than half the average new car. So there's little surprise to find out that used cars outsell new cars three-to-one.
But which is the best for you?
Both have their benefits
New cars are considered a better buy if you intend to keep them longer than the average owner (four to six years, according to the National Automobile Dealers Association). As it gets older you'll know you're driving a well-cared-for vehicle.
With new you have more choices. You can ask a dealer to provide you with exactly what you want, from the color and the engine size to the dashboard layout and the shape of the floor mats. With used cars there is less choice. You're buying what is sitting there on the lot.
New cars come with warranties that have real teeth (although they also have some limitations). And both the dealer and manufacturer have more obligations to you if something goes wrong with your brand new vehicle. Used vehicles can have warranties, but they rarely approach the coverage of new car ones.
Used cars will make much less of a hole in your budget. If you find a model a year or two old, the vehicle's initial owner took a massive hit in depreciation. A new car can lose as much as 20 percent of its value in its first year on the road.
Look out for hidden costs
But beware, used cars generally cost more to maintain. Wear and tear has already taken a toll -- some of which you may not be able to see -- and that can mean high repair and maintenance bills (which should be part of your cost estimate).
A used car generally costs less to insure -- it certainly costs less than that same car when it was new.
Remember to compare not only vehicles but also payments. Because new cars are financed with lower interest rates, it may be possible to buy a new car for what you were planning to spend on a used one.
| New-car advantages |
Used-car advantages |
• Full factory warranties
•Lower interest rates
•Longer-term financing
• Easier to lease
• Lemon law protection
• Generally safer
• You lose big money with depreciation in value the minute you drive off the lot
• They cost more |
• They cost less
•Owner absorbs largest depreciation
• Greater price variation -- shop around and similar used cars can be thousands cheaper than others
• Financing rates are higher
• They're more likely to break down.
• Weaker warranties |
By the same token a three- or four-year-old "name" brand might be a better buy than a one- or two-year-old without such a solid reputation. A popular make and model will cost you more, new or used, than similar vehicles without a reputation but which may be almost the same from stem to stern. Always consider this: does the car's reputation come from reliability and performance or because they are "hot" or "bad".
New or used, something exotic will cost more to maintain and repair.
Vehicles that have been leased or company cars will often appear on the used market with low miles and a special warranty or even a major part of the original factory warranty intact. Some dealers will grab the best of the used cars they have and give them a special certification and warranty. These cars fit somewhere between brand new and used in as much as they are still very close to their original condition
Many of these cars, especially the more popular makes, may get a dealer's "pre-owned" sticker. Pre-owned means used.
