Should I Buy a New or Used Car?

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A guide to choosing between a brand-new or pre-owned vehicle

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There has never been a better time for car buyers to invest, thanks to a market that is flooded with second-hand vehicles and manufacturers pushing out great deals to keep up with the competition. But, while purchasing a vehicle might sound like a straightforward process, most buyers end up asking themselves, "Should I buy a new or used car?". The answer to that question is a loaded one, with pros and cons for buying new or used cars that are worth looking at.

New or Used Car

New vs Used Cars: The Numbers

Statistics show that used cars consistently outsell new vehicles; in 2019, around 40.8 million used car models were sold, while only 17 million new automobiles were processed in the USA. This trend, according to data analysts, continued into 2020 with the global pandemic further increasing the number of used cars for sale in the US, due to the lockdown and quarantine of local businesses, many automakers halting production, and restrictions on public transport being put in place. These numbers show just how many people buy used vs new cars in order to save money.

Added to this, recent market surveys have also determined that used cars are becoming younger, with more consumers trading up from older, cheaper vehicles. Although this means that the used car market will show a shift towards more expensive prices, it also means around 60% of available pre-owned stock is expected to be three years old, or younger, by 2022.

Buy a Used Car
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5 Reasons You Should Buy a New Car

If so many shoppers are opting for pre-owned, why should you buy a new car? Despite the benefits of opting for a used purchase, choosing to go brand-new has its advantages too:

  • It's easier to shop around: As car manufacturers tend to have multiple dealerships, and, considering the global health scare, online shopping platforms increase in popularity, doing initial legwork has never been easier. There is no need to go out of your way to view a car, and some premium brands will even bring the car to you for a test drive.
  • It's easier to pay for a new car: When buying used, you will be limited as to the number of ways in which you can pay for a car. Certain institutions won't finance cars over a certain age, which means you'll have to pay cash. New car loans may have better interest rates, and dealers also tend to offer a large number of incentives, discounts, and cash-back deals on new cars. It is also easier to compare costs when the price is semi-regulated.
  • Peace of mind: Since you're shopping for a brand new car, you don't have to worry about things like wear and tear, damage, or failing parts, and there will be no need for a mechanical inspection. Most manufacturers in the USA offer a warranty on new cars for added peace of mind, too.
  • New Tech: Buying the latest models in 2021 might be pricey, but it also means that you gain access to all the latest tech. This can be in the form of an advanced new infotainment system or new engine technology that improves performance or cuts down on emissions. The evolution of driver assists, safety aids, and self-driving technology has never been more evident than in the newest releases.
  • New car smell: Let's be honest, there is nothing better than the smell of a new car, and for some, this is an actual selling point. There's something wonderful about a brand-new vehicle that has little to no mileage on the clock.

Tips for Buying a New Car

When it comes to buying a new car, there are a few things to keep in mind. Tips for buying a new car include doing your research on:

  • The car and brand itself, as new models may be untested by rating agencies for safety and reliability
  • Some brands have better resale value than others and will affect your future plans
  • New cars depreciate a soon as you drive away from the dealership, so keep trade-in value in mind
  • Brand-new vehicles tend to have higher insurance costs
  • What financing and loans entail and what you can actually afford, all-included
Buy a New Car

Why Buy a Used Car?

There has never been a better time for buying a used vehicle. The various benefits can be summarized as follows:

Pros and Cons of Buying a Used Car

  • Cheaper: The most obvious advantage of buying a used car is that it will be significantly cheaper than a new one. Relatively new models would have absorbed the worst of the depreciation, leaving you with a solid asset.
  • No hidden costs: Buying a pre-owned vehicle as-is simplifies what you spend - the price won't be inflated as you tack on various extra features or elements, helping you to stick to your budget much more closely.
  • Choice: With the number of used cars available, and the drop in price, you may have some choices available to you that would not have been an option if you were buying new - a more premium car, albeit older, could find its way into your garage, thanks to its reduced cost price.
  • Balance of warranty and motor plan: When you buy used, it doesn't necessarily mean that you are left to your own devices when it comes to car maintenance. Manufacturer-certified used cars will come with the balance of a warranty or motor plan.
  • History: Although used cars have a service history, the advantage of this is knowing exactly how often preventative maintenance was done, and whether the vehicle has presented with any major faults or failures - this gives you a clear picture of the 'health' of the car you're looking to purchase.
  • Lower finance cost: The reduced asking price of second-hand cars means that finance and insurance costs can be cheaper overall, but you may pay a higher interest rate as some lenders consider used car loans to be more risky.
  • Customization: Buying used means sticking with the configuration or build the original owner decided on - and, while you can always modify the car after purchase, it's not quite the same as specifying it personally to suit your unique tastes.
  • Older cars may have less tech: As technology continues to evolve, used cars may be a little behind the times with the latest tech features. Shop around and be aware of what you are signing up for if you opt for a car older than three years.
  • Cost of repairs: Vehicles out of warranty can be much more costly to maintain and repair, and what you save on the initial purchase price can be offset against what you may spend if you have a car that requires numerous repairs or services.
  • History: The downside of a used car is the wear and tear of mechanical parts, and if it's quite a bit older, even interior bits and pieces like upholstery and surfaces. If maintenance and repairs have not been documented, this could likely be a large red flag.

Tips for Buying a Used Car

Whether it's an old car or a new car, there are certain things you have to look out for before buying. Some tips for buying a used car are:

  1. Set a budget: Before you even start looking for a used car, it is important to have an idea of how much you'll be able to afford. Without a budget, your finances could quickly balloon out of control - make sure you know what you are able to fork out if you're paying cash, or get pre-approval from a financial institution before starting your shopping to avoid emotional decisions - stick strictly to the figure you can afford. Your budget will determine what kind of vehicle you can get; comparing what is available under 20,000 dollars versus what there is under 10,000 bucks will be quite different.
  2. Shop around: Do your research before you even go to a dealer or private seller. There are numerous ways to shop, with online platforms being one of the best places to buy used cars, especially in the wake of the global pandemic. You'll be able to see trims, mileage, history, and features available before setting foot out the door.
  3. Compare prices: The used car market is a great place to find a bargain, so comparing prices is a must. Whether you use a search engine, car finder websites or even your local newspaper, it is always best to weigh up options to ensure you get the best deal for your money.
  4. Get the best trade-in value: If you have a trade-in, don't just let a salesperson tell you what you'll get for it; use services such as Kelly Blue Book. This site's car value tool will give you a great idea of what to expect.
  5. Test drive: One of the simplest but most important steps to buying any car is to test drive it, especially when it comes to used cars. A test drive will reveal any squeaks, rattles, and mechanical issues if you are attentive.
  6. Car history: Just because a car looks clean, has good mileage figures, and is parked at a reputable dealership doesn't mean that it will be trouble-free. Make use of services such as CARFAX to get a better idea of the car's life. Checking the title at your local DMV is also recommended. A full history of service and repairs is always a plus.
  7. Recall history: It would be worth checking if the car you're after has been subjected to any recalls, and websites such as J.D. Power and the NHTSA can give you an overall picture of the reliability of certain models.
  8. Get an inspection: An untrained eye can only spot so much, so it would be wise to get your potential car checked out by professionals. If a seller is not keen on the idea, then it might be a sign that there is something wrong with the car.
  9. Sweet spot: Cars between the age of two and four years old are in the 'sweet spot' between depreciation and repair/maintenance outlays, and will be an excellent investment in the long-run.
Used Car

The Secret to Buying a Car: New or Used?

There's another little secret to remember when buying a car: different times of the year will yield different prices. Did you know there are times when it is better to buy a car, and times to rather wait? It turns out that October, November, and December is the best time of year to buy a car, according to recent research. Since dealerships have sales quotas to fill, at the end of the year, prices often get lowered to draw more sales in.

Whether you buy a new or used car, there are some similarities in how you go about making the final decision. As we've discussed here, buying new cars vs. used cars requires doing some research. Remember that while the initial cost of purchase of a brand new car may be high, this is offset by lower maintenance fees - at least, in the beginning. You will spend more as time goes on and major services are required.

And, if you are still unsure about buying new vs used, here are some FAQs that may help:

FAQs

How do I find out what a used car’s true mileage is?

Certified pre-owned cars have been extensively inspected and checked by the manufacturer - the mileage shown should thus be correct. This may not be the case if you are buying a used car from a private sale.

How do I know if all the safety systems are working on a used car?

On modern cars, a simple diagnostics scan will show you whether or not there are any issues with the airbags and other systems such as ABS and stability control. It's a good idea to have this checked before making a purchase.

How do I find a trusted dealer?

The internet is a great place to find a good seller. Consumer reviews are a good place to start, but forums and social media can be just as useful. Alternatively, look for vehicles listed for sale by a dealer on reputable automotive sites.

What happens when my car breaks down right after I purchased it?

If you did not purchase a car with an existing warranty plan, this may seem like a disaster. And as the federal "cooling-off rule" does not apply to car purchases, this may be true. It is thus best to ensure you buy from a reputable dealership or agency, or have done your research on the private purchase. Stay away from vehicles with no information about their history.

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