Auto Loans 101
Step 2, Part 1: What Do I Want?
Page 5 of 17
New vs. Used
According to TheSimpleDollar.com, this is what you need to know before choosing between a new car and a slightly used model:
The longer you hold onto a car,
the less it depreciates each year and thus,
the more cost effective it becomes.
What does this mean for you? It means that buying a brand new car and driving it off the lot will cost you more in depreciation than buying a late-model car.
- Used cars will be cheaper than a new car in both sticker price and depreciation costs.
- Insurance costs related to theft and collision may be cheaper for used cars.
- Buying an older but cheaper model may allow you to afford more car.
However, this does not mean that used is always the way to go. If you plan to drive the same car for the next 8-10 years, you’ll want something reliable and you’ll want to know the car’s history.
- A new car comes with a complete manufacturer’s warranty, typically at least three years or 36,000 miles.
- Want the latest safety features or a jack for your MP3 player? A new car will have all the up-to-date technology and features.
- With a new car, you don’t have to worry about what a previous owner may have done to depreciate the value. There are no surprises.
Either way, there are pros and cons to buying new and used vehicles. The bottom line? If you can’t resist the allure of a new vehicle, be sure to buy a car that has everything you’ll need for the future, if your budget allows.
