New versus used cars
Buying a car? It’s time to get your motor running. One of the first decisions you’ll have to make is whether you want a car fresh off the assembly line or one that’s been well-loved. There are advantages to each, varying from difference in price to quality guarantees. Here’s what you should consider when deciding between a new or used car.
Advantages to buying a used car
It’s cheaper. A lot cheaper.
A new car significantly depreciates the second you drive it off the lot, which is why the age-old wisdom in car-buying is to buy used for a sweeter deal. Since a used car has already gone through that depreciation process, it’s a lot less expensive than a new model. Aside from just the initial sticker price, you’ll also pay fewer registration fees, dealer fees and sales tax. In short, if you’re willing to sacrifice that new car smell, you’ll save a lot of dough.
There are some gems out there
Getting a used car doesn’t have to mean you’re buying a clunker. You can find plenty of gently-used cars in great shape with low mileage. Nevertheless, always do your research on the car. There are services available that show you a service history of the vehicle, like Carfax. Many dealerships sell certified pre-owned used vehicles, which means the vehicle is put through inspection and damages are repaired. Often they will include a limited bumper-to-bumper warranty and car-extended warranty. Non-certified pre-owned used vehicles may have undrgone inspection for minor things, or perhaps there was no inspection at all. These typically have a “sold as-is” marking somewhere.
Lower car insurance premiums
Because a used car is worth less, you may be able to get lower insurance rates. Keep in mind that a driver’s age and driving record also play a big factor in insurance costs. However because the value of a used car is generally lower than a new car, it’s possible to find great coverage without blowing your budget out of the water.
Advantages to buying a new car
There are certain guarantees when buying a new car that you don’t get when buying a used one. New cars often have a three or five-year warranty, so even if it needs maintenance early on, it’s covered. The battery will be new, the oil won’t need changed, and you typically don’t see any wear-and-tear on the interior or exterior. With new cars, you can rest assured that you’ll be the first one to ever ding the door. New cars are also protected by lemon law. This means if your new car is defective, you can get your money back or replace it. Used cars, not so much.
Here’s the low down: your interest rate is determined based on several factors, such as year of the car, its features and your credit score (to name a few). Since new vehicles are less risky, you can usually get lower interest rates when you finance a new car. Used car financing typically comes with higher interest rates because the car is older and carries greater risk for mechanical deficiencies. Whether you’re looking to finance a new or used car, keep in mind that credit unions, like Andigo, offer better rates than banks or financing programs at dealerships.
New cars come with the latest technology available. Depending on how much you’re willing to spend, you can get the newest safety features, best navigation systems and highest fuel efficiency.
Don’t worry — there is no right or wrong answer. Deciding whether to buy new or used depends on your budget, what you’re looking for and how much of a risk-taker you are. When you’ve decided what’s right for you, check out our blog on how to purchase a car. It’ll walk you through the process, step-by-step, until that new set of wheels is yours.