NBSB’s Guide to NEW vs. USED: Pros and Cons to Consider
Thinking it’s time for a new vehicle? First deciding whether you want a new or used car can help narrow your search. There are pros and cons to buying both new and used. Use this article to help you decide what is best for your car buying experience.
Pros of buying new:
- There are many redeeming qualities that come with purchasing a new car. The latest bells and whistles, a warranty and/or roadside assistance.
- Some people feel better knowing they were the first and only owner, and that they know the vehicle’s whole “story”.
- Many new cars come with a great financing offer, low monthly payments, 0% interest or even cash back. In short, paying more up front could give you the peace of mind to know you are already covered if something happens to your vehicle down the road.
- Buying brand new may be the only way to obtain all the latest tech features. If you are a tech seeker, obtaining safety features such as lane assist may be a priority for you.
Cons of buying new:
- Keep in mind if you have a lower credit score, you may not qualify for the offers that make new vehicles so attractive in the first place. Many folks don’t have the funds to put thousands down on a new car of get into large monthly payments.
- When buying/financing a vehicle you need to have full insurance coverage. If you’re one of the many Massachusetts residents who keeps liability only coverage (bare minimum) on their vehicle, this may be an adjustment for you as far as cost and may be something to consider. You insurance company can help quote you on what full coverage would be if you present them with vehicle details.
- New cars don’t stay new forever, according to Investopedia, a brand new car will depreciate 10% once it’s driven off the lot. Own the car for a year and the value just depreciated another 20%- so you are a year into your auto loan- and your vehicle has already depreciated by at least 30%. After three years, the average car is worth about 60% of what it was when new.
Pros of buying used:
- Even buying used can sometimes come with incentives, some dealers/manufacturers will offer special promotion to move those older cards off the lot.
- Some used vehicles are still eligible for a warranty. Cars made within the last few years and under a certain mileage can still be covered under manufacturer’s warranty, CPO vehicles may also be eligible for warranties through the dealership in the form of an “Extended Factory Warranty”
- Used Cars have lower depreciation rates. Something brand new will lose its value faster than something that has already made it way around town a bit.
- Consider how you will use the vehicle. If you work close to home and do not travel long distances, a cheaper, older car may be just what you need.
Cons of buying used:
- All those repairs that come covered under a warranty with a new vehicle, are not covered.
- When buying used you need to consider the actual age of the vehicle. Consumer reports state that vehicle years from 2007-2014 should expect to pay anywhere from $10-$390 annually for repairs, whereas cars 2007 and older could come with costly repairs into the thousands annually.
- More leg work. Often choosing the right used car is like finding a needle in a haystack. If you’re willing to put in more of your time, it could save you money in the long run. While you can finance a used vehicle, use caution. Often interest rates can be quite a bit higher for vehicles older than 201o. When you crunch those numbers, make sure that you aren’t paying more in the long run by having a high interest rate.
The Bottom Line:
No matter what you choose to do, make sure you do your homework. Knowing more about the current Vehicle Market, Insurance Rates, Auto Loan Rates and the total cost of the vehicle are great key points to consider while shopping.
To learn more about taking the first step and seeing how much car you can afford, read NBSB’s article “Tips to Figure out How Much Car Can You Afford”. For questions about financing, prequalification or estimated monthly payments, feel free to reach out to our knowledgeable staff at 508-867-7442 or schedule an appointment.
View Rates, Learn More about our Loans, and find other helpful resources in our Auto Loan Resource Center.