Is Buying a New Car or a Used Car Better Value?

If you're planning to buy a vehicle, you might be debating whether you should buy a new car or a used car. Let's look at which offers better value.

Americans love their cars. Even during the pandemic when auto sales were dropping, 2020 still saw 14.4 million car sales across the country.

Well, all of those buyers faced a difficult choice on what type of car they wanted to buy, but luckily, we can make that choice easier for you. Let's answer the age-old question: Should I buy a used car or a used car?

Benefits of a New Car

There are undoubtedly some major benefits to purchasing a new car. For one, you're not taking any risks over the previous owner and how they managed the vehicle, and you're in total control of vehicle maintenance from the start.

You will also be able to keep a new car for much longer, barring any accidents or maintenance issues. If you keep up with a new car's maintenance needs, you will be able to keep it for years and years and resell it for a decent price when you're ready to move on.

You will also get to be the talk of the town for the year, as you'll have the latest new model of your vehicle. You'll get to benefit from the most recent improvements in auto technology, whether it's for safety or luxury. You will also avoid any of the expensive repairs for the next few tens of thousands of miles and simply get the time to enjoy and appreciate your new vehicle.

Downsides

However, there are some downsides to owning a new car that are worth noting. The biggest downside is that they are expensive, often very expensive. In fact, the average new car in 2021 cost over $40,000 for the first time ever.

Very few of us have $40,000 to drop on a car in our piggy banks, so we often rely on loans. However, a 5-year loan with a $5,000 downpayment will still have you paying $603 a month with a 3.49% interest rate. Remember when that was your rent?

This is simply because you're buying the hottest new thing. It's the newest technology and a temporary status symbol that fades away after only one year when the next model is released.

Not only that, new models tend to cost more during ownership. Many of them won't let you change your transmission fluid, oil changes become more expensive, and insurance rates are higher. All in all, the main downside with buying a new car is the cost.

Benefits of a Used Car

The major benefit of a used car is obvious, and it's saving money. Who doesn't like to save money?

When you buy a used car, assuming that it's in good shape, you can run it for thousands of miles for a fraction of the price. However, there is a fine line to tread. You want to find the right price and quality ratio to make it a wise financial decision.

The good news is that there are plenty of quality used cars out there. Ones with detailed owner history, no accidents, smooth engine, proper maintenance, and everything else. With used cars, it's important to test drive them and make sure they are running efficiently. If there are no concerning sounds, it drives smoothly, and everything looks good, then you may have found a winner.

Downsides

What are the downsides of buying a used car? Well, you don't get to control what the previous owner did with it. However, you can control your own purchase.

Getting the car checked out by a trusted mechanic is always a good idea. It's also a great idea to ask for a maintenance history of the car.

The Verdict

The verdict is that used cars are the winner, only on the condition that they are in good shape. A good rule of thumb for your financial health is to aim to buy a used car that's between 2 and 5 years old, and ideally a one-owner vehicle.

The reason for this is that a car loses the most value after the first two years while still sacrificing the least amount of quality. If you can get a car that's 2 or 3 years old, the technology won't be far behind, it will still run like new, you'll be able to drive it for a long time, and the price will be significantly reduced.

Buying a vehicle from 2005 for $4,000 may sound appealing, but if that car only lasts you a year and you have to put $1,000 worth of maintenance into it during that time, then there was no point. It also won't have the same luxuries as a newer model that you'd be spending less money on in the long run.

You may want to look for deals at your dealership as well. Buying at the right time or looking for the right financial incentive could save you a lot of money on your purchase.

It's also a good idea to buy the right models. Choose a few car manufacturers that you trust and that have a good reputation. Japanese car brands are known for lasting a long time without any major problems, so find the right car for you and try to make a responsible, long-term investment.

Why Wait?

If you're looking to buy a new or used car, there's no time like the present to start your search. Buying a car is both an exciting and stressful time for most of us, so make it easier on yourself and only shop for trusted models from a reputable dealer. Stay up to date with our latest auto news and feel free to contact us with any questions!