Imagine this: You walk onto a car lot and spot the ride of your dreams. Should you pull the trigger? Work with the salesperson to make your best deal with the dealership? Compare deals with other dealerships? Or, on the other hand, should you buy used, looking to make your best deal? The answer may not be as simple as many would have you believe. But by weighing a few factors, you can drive away with a new-to-you car while knowing that you found your best ride.
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Cost difference. Are you just looking for cheaper? The average used car costs less than half the price of an average new car, according to Bankrate. So, if you’re looking to invest less capital in your ride today, purchasing used is the obvious choice. However, used cars may be more expensive to operate over time because of wear and tear. If you buy used, you’ll want to have an emergency fund in place and backup rides available if your used vehicle decides to have problems during your commute.
Winner: used car
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Depreciation. If you worry about your car maintaining its value, you probably want to purchase a used car. New cars will often lose up to 60 percent of their value over the first five years on the road, according to Carfax. That gives new cars a big hurdle to climb just to break even with the used market.
Winner: used car
Total cost to drive. Sure, used cars may cost less upfront than new autos cost, but what about the cost over the life of the car? Because new autos generally experience fewer problems, are they worth the higher price? In some cases, a new car may be more attractive. If you can find a heavily discounted model that includes an attractive warranty and excellent dealer-related benefits, such as free oil changes or servicing, a new car may be the better option. Without heavy discounting, though, new car owners will have a tough time overcoming the big cost difference at purchase, even with incentives and dealer benefits.
Winner: toss up
Financing. While paying cash is usually more attractive than financing a depreciating asset, such as a car, sometimes you need a loan to buy your next ride. On one hand, finding car dealer incentives and attractive financing isn’t difficult. Often, you’ll find a low interest rate or even zero percent financing on models that dealers are trying to move quickly from the lot. However, don’t rule out used cars when looking for loans. Despite usually having a higher interest rate initially, a used car is clearly the winner in cost when evaluated over a six-year period, according to a study from Edmunds, a car shopping and comparison website. That’s because of the lower initial cost. If you plan to drive your car for a long time, used car financing is nearly always a better deal (assuming your car lasts six years).
Winner: used car
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Warranties. Here’s one area where buying new might be a better deal than buying used. While warranties exist on used vehicles, they aren’t as common, and are sometimes more limited, than those on a new car purchased directly from a dealer. With a brand new ride and the assurance that if anything does go wrong with your car, you aren’t going to have to shell out more money, this is the one area where a new car shines.
Winner: new car
While a used car appears to be the winner when purchasing a vehicle, this clearly isn’t a one-size-fits-all model. If you’re worried about reliability or need a sleek, sporty ride for your profession, a new car can fit the bill. Also, and perhaps surprisingly to some, on some models, new cars actually may make great fiscal sense when compared to their used counterparts. However, most people are better served avoiding the showroom and the allure of the new car smell and looking to score a deal on a used ride instead.
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Why Buying a Used Car Almost Always Beats Buying New originally appeared on usnews.com
