Buying a New Car vs. a Used Car – Which is better?
Purchasing your dream car is a complex decision. You won’t just have a vast number of models to pick from. You will also have the option of choosing between a used and a new car.
These days, a car’s value depreciates over time. That means they aren’t an investment. So you might want to be very keen on the cost-effectiveness.
Buying New Cars
Opting for new cars means you are in for the latest models. The manufacturer’s warranty can cover cars like Mitsubishi ASX for sale, and you will not have to worry about MOT tests for several years.
You can also configure a vehicle according to your precise specification. Not to mention, a new car finance package is more attractive compared to those offered with used models.
You can’t ignore the curb appeal of a new car, from the clean interiors, shiny paint, and fresh smell to the oohs when your family and friends see it for the very first time.
In the consumer culture, new cars undeniably symbolize status, letting the whole world know you have arrived.
Cosmetics aside, new cars also come with numerous benefits. Some of these benefits are not limited to the following:
- Warranty – Like everything in the car, the warranty of a new vehicle is not touched. You may buy a warranty for a used car or opt for a certified pre-owned route. However, one of the best warranties you may get without paying more cash is those with new cars from their manufacturers.
- Modern technologies – Buying a new car means seeing and enjoying its latest technological advancements. New cars mostly come with the latest accessories and equipment.
- Capitalizing on the financing offers – A dealer can offer buyers special monetary incentives, such as 0% financing or cash back during promotional periods. These offers help to lower upfront costs, making new cars much more affordable.
- Safety – As car safety laws become more stringent, manufacturers cannot change how their vehicles are made. This includes the safety devices that those cars are equipped with. For instance, a form of stability control and tire pressure monitoring is not a must on every car sold in countries like the US. Other technological advancements, which aren’t mandated, such as adaptive cruise control, lane-keeping assist, and blind-spot monitoring devices, are becoming prevalent on less costly cars as the associated expenses go down.
Of course, buying new cars also come with some disadvantages. Some of the most common disadvantages are the following:
- High cost – Going for a new car is basically an expensive affair. Regardless of which segment the car belongs to, new vehicles command a high cost than used ones. A costly price tag can be a deal-breaker, especially if you have a tight budget.
- Depreciates quickly – New vehicles depreciate faster than used cars. Normally, cars lose value in the first several years of ownership. According to some estimates, this loss can be around 24% of the vehicle’s value. This is because when you buy new cars from dealers, it means you are paying retail prices. Once you get off the lot, your vehicle will have a lower value than the wholesale cost.
Buying Used Cars
Used cars are those that have been previously owned and registered by other people. In other words, it has covered more than the delivery miles.
A used car may vary wildly from a well-worn workhorse with 200,000+ miles and four owners to a nearly-new ex-demonstrator with just a few miles or anywhere between.
Although they are cheaper than a new car, you won’t enjoy a warranty. Plus, you will need to be careful about MOTs.
Buying used cars is a perfect option for many people, as it offers low-cost alternatives in the long run. Even with used cars, there are opportunities to get a reasonable financing rate, allowing you to spread purchase payments. Some of these benefits are:
- Slower depreciation – Perhaps you’ve heard that vehicles depreciate faster. As a matter of fact, a report from CarFax shows that a new car loses more than 12% of value in the first four weeks and another 12% within one year. Once you go past the initial depreciation, the drop will happen much more slowly. Buying a vehicle just one or two years old may help avoid the quick depreciation seen in new cars.
- More affordable features – Because you won’t be spending cash on depreciation, you can afford amenities, such as premium sound systems and leather seats.
- Low registration fees – Some countries base the car’s cost on age. A new car has the highest fees for registration and slowly minimizes as it ages. If you live in a country that articulates registration costs in this manner, you will surely save cash every year by buying a used vehicle.
- Guesstimated history – There are many ways to research used cars. However, there could be blank spots in a car’s history report even after you do due diligence.
- Less warranty – Although a used car can have some of the original factory warranty remaining, you may need to buy an extended one so as to get the kind of coverage you need.
The Key Difference
According to car experts, an average loan for new cars costs around $30k for 70 months. This is around $500 monthly. So a new car owner can expect to pay nearly $35,000 for the loan.
In contrast, a used car has an amount of $19,200 for 64 months on average. This monthly payment equates to around $364, and a used car owner should anticipate paying approximately $23,100. This is a whopping $11,900 difference.
The Final Verdict
Choosing between a used and a new car will depend on your current situation. If your budget allows, go for a brand-new car, as it offers value in terms of safety, reliability, performance, fuel economy, and the number of options to choose from.
However, buying a used car will be a viable option if the overall value is what you are after and you have a tight budget.