Buying a Used vs. New Car: What to Know
Windows down. Sunroof open. Music on. The freedom of getting from point A to point B is having the ability to operate your own vehicle. In a consumer’s world, there are an endless number of vehicle options out there today. You can choose from coupes, sedans, trucks, SUVs, hatchbacks, minivans and more.
Picked a vehicle type? Now it’s time to pick from a manufacturer, where you have yet another set of options. Picked a manufacturer? Now it’s time to pick from pre-owned or brand new. Choosing a vehicle that’s right for you can be difficult. Purchasing a vehicle is pricey and you don’t want to spend money on something that won’t last. Here, we break down the benefits and disadvantages of purchasing pre-owned or new.
Pros and Cons of Pre-Owned Cars
Owning a pre-owned vehicle has many advantages. Used cars depreciate in value at a much slower rate than new cars. Let’s say you bought a car for $30,000 that was originally $45,000 new, three years ago. Another three years go by and you sell it for $20,000. This car is now six years old and it sells for a little less than half the price. If you had purchased the car new, it would have depreciated at a much faster rate.
A stigma that pre-owned vehicles have is not being reliable. Used cars today have never been more dependable, as some cars can go 100,000 miles without needing any serious repairs. Pre-owned vehicles do end up having lower car insurance premiums because when a car is worth less, it costs less to insure it. Not only do pre-owned vehicles have lower car insurance premiums, but it may also be cheaper to register them every year.
Pre-owned vehicles do have some setbacks. When deciding to buy a used car, you won’t have limitless options on car manufacturers, models, types and colors. You are limited to what dealerships or private salesmen have in stock at the time. Most people do not pay for pre-owned vehicles with cash outright as not many people have thousands of dollars in cash lying around.
Another disadvantage of purchasing pre-owned is the unknowns of the previous owners of the vehicle. There’s no way to tell who the previous owners were and how well they kept the car in good condition with routine oil changes, brakes, and other maintenance items.
Pros and Cons of New Cars
That new car smell. Untouched seats. Shiny paint. There are many advantages when purchasing a new car. Shopping for a new car is easier because all new cars are assumed to be in perfect shape, so wondering about its condition isn’t needed. There’s also no need to take it in to get checked by a mechanic.
Typically, auto dealers offer numerous incentives to have consumers purchase new vehicles, such as cash rebates; and new car loans have better interest rates. Not only do new cars have lower interest rates, they’ll come with the latest new features for comfort, performance, and safety, so you’ll have peace of mind when it comes to the reliability of purchasing new.
As mentioned above, new cars typically depreciate at a faster rate than pre-owned vehicles. Let’s say you purchase a brand new car for $45,000. Three years later, you sell it and it’s only worth $30,000. That brand new car you purchased, costs you $15,000 in depreciation. You might also have higher monthly payments, depending on the down payment you put in ahead of time. Not only will you have higher monthly payments, insurance premiums are based on several factors, and sometimes higher for new vehicles.
What’s Right for You?
Overall, it’s up to you to figure out if purchasing a pre-owned vehicle or new vehicle is right for you. Purchasing a pre-owned vehicle has its fair share of advantages such as lower monthly payments, lower insurance premiums, and lower yearly registration fees as well as, knowing that your used car depreciates at a slower rate than if you were to buy a new car. The cons include less up-to-date safety, technology, and style features, in addition to fewer options to pick from and not knowing how well kept the car has been before you bought it. Purchasing a brand new car comes with all the bells and whistles, the limitless options you have from car manufacturers, knowing the car is in tip-top shape and not having to take it to a mechanic to get it checked, as well as the latest safety, comfort, and performance features.
Get a Car Loan from Service Credit Union
No matter what you decide, Service CU is here with low-rate auto loans to meet your needs. So, whether you’ve decided to buy a new or used car, get your auto loan from Service Credit Union!
