When you're ready to replace your current vehicle with another make or model, you have the choice between purchasing a new or used vehicle. But there is a lot to consider with either option. Here are some of the major advantages and disadvantages to help you decide:
Advantages of a new car
- Includes the latest safety features
- Not subject to any wear or tear, no accidents or negative history
- Manufacturer's warranty included in the purchase price
- More financing options are available
Advantages of a used car
- Lower price tag compared to new may allow you to upgrade your choice of model
- More room for negotiation
- Reduced rate of depreciation
- A used vehicle may be less expensive to insure
- Possible incentives on pre-owned models
Disadvantages of a new car
- Higher price tag
- Significant depreciation within the first year with most vehicles losing about 20% or more of their original value, according to Kelley Blue Book (KBB).
- KBB also reports the car is worth approximately 40% of what you paid for it at the dealership after five years.
Disadvantages of a used car
- Additional hands-on research to find the car you want and make sure you are comfortable with the car history
- Possibility of higher maintenance costs
- The car may not be covered by any warranty
You probably know the color you want and options that matter like safety features or a great stereo. But you might need to make a trade-off and sacrifice one of your features or options to get the best possible car and value for you. Try to prepare yourself that the candy apple red car you envisioned yourself in might instead be a sleek silver.
Whatever your decision, it's important to do your research. There are lots of factors to consider including the cost of fuel, financing available and operating expenses, in addition to insurance and depreciation. Take a good look at all the costs before you decide on a new or used car. You may be surprised at what you find—and what turns out to be the right decision for you.