UPDATED: Mar 18, 2020
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A car buyer may have a tough time deciding what make and model of the car they want. They may have an even more difficult time deciding whether to buy a new or used version of the car.
Additionally, a car buyer may determine what car insurance is needed when making this decision. Buying a used car may be cheaper, but a new car can come with fewer unexpected costs and repairs.
There are many advantages and disadvantages to both options, and your choice will hinge on analyzing these pros and cons.
Advantages of Buying a Used Car
The primary benefit of buying a used car is that it can be cheaper than buying a new one.
When deciding what’s right for you, there are several advantages to buying a used car you should be aware of, including:
- A buyer can save and even pay cash (if you choose to) for a used car — instead of taking out a loan.
- If a loan is taken out, great financing options are available.
- With services such as vehicle history reports, a buyer can feel more confident purchasing a previously owned car.
- The original purchaser of the car has already taken the depreciation hit — meaning a used car can be sold for the same amount or more than it was bought for.
- Insurance rates may be quoted lower, as used cars are cheaper to replace for insurance companies.
However, in many instances, the drawbacks of buying a used car may outweigh the money saved.
Disadvantages of Buying a Used Car
Buying a used car may come with financial benefits, but may also come with many uncertainties.
You may want to consider all the following disadvantages of buying a used car, as you may end up paying more than the upfront cost in the long run.
- A used car may not be as reliable as a new one, as there may be unexpected repairs and additional costs required. As a result, you may want to consider purchasing an extended warranty as a way of protecting yourself against unexpected and expensive repairs.
- Maintenance history reports may be falsified.
- A used car does not always come with the same features as a new car. This includes safety features, which may be a deciding factor in a higher insurance rate.
- A buyer may also have to make compromises in the car and features they want in an automobile — color, model, wear and tear, etc.
Advantages of Buying a New Car
Some may prefer enjoying the benefits of purchasing a new car (if they are financially able to).
If a prospective car buyer has the income, they will be paying for many of the advantages below:
- A new car should require minimal repairs in the first few months and years of driving, allowing the buyer to keep up on maintenance rather than spending money upfront to fix the car.
- New cars are likely to last longer, as they are just off the factory line, have considerably less mileage, and don’t have any wear and tear.
- New automobiles are outfitted with state-of-the-art features, including GPS, Bluetooth connections, and more.
- New cars come with the latest safety measures. Innovations are made to car safety almost yearly to decrease the risk of injury or fatality.
- A brand new car, fresh off the lot, will likely come with a factory warranty.
- A buyer can pick any make and model of the new car they want, granted they can afford it.
Disadvantages of Buying a New Car
The price of a new car alone can push someone to consider buying a used car or to consider an alternative mode of transportation altogether. It is best to consider the following before buying a new car:
- A new car will depreciate as soon as you drive it off the lot — and will depreciate more in the first couple years of driving it.
- New cars may come with higher tax and insurance costs. Although some insurance policies may build gap insurance into your agreement, and may even replace a new car within a certain age.
Should I Buy a New or Used Car?
The decisive factor in choosing whether to buy a new or used car will most likely be your financial situation. Financial considerations adding to this decision can include the rates available when purchasing car insurance.
Ultimately, a car buyer may decide that a new car is too much money, and may find a used car with slightly fewer features, and at the risk of additional repairs, may be easier to afford.
Calculating your finances for a car is crucial when making this major decision.