It’s the eternal question of any wishful motorist ready to purchase a new set of wheels—do I go with a used vehicle or do I spring for the brand-new model? While both options come with their downfalls, we’ve outlined some of the aspects in each choice’s “pro” column below.
So what’ll it be—used or new? Read on for some tips and insights.
Okay, let’s start with the obvious. The options when it comes to used vehicles are going to be largely less expensive than buying new. (Yes, it kind of goes without saying.) But one other key element of buying a used vehicle has to do with value, which is a totally different animal than price once the purchase is complete. You know what they say—a car markedly depreciates in value the second you drive it off the lot. That depreciation number, on average, is much less steep in a used vehicle than in a brand-new one. So on major pro to buying used is maintaining more of the car’s value once you’ve driven off into the sunset.
Couple that price and value with the various levels you have of what’s considered “used,” and you’re setting yourself up for success. After all, you can seek out vehicles that are listed as “certified pre-owned,” which essentially means that, though it’s technically had a previous owner, it’s been refurbished, reconditioned and tested to be virtually “like new.”
One other cast factor in play when it comes to vehicle ownership is the matter of your insurance policy. You’ve heard the stories—“red cars cost more for insurance,” “the sleeker the car, the higher the premium,” and the like. But one thing that’s nearly for certain across the board—a used car will cost less to insure than a brand-new one. So if cost-saving is a priority, the insurance sticker price will be a major “pro” in the used-car column.
All right—so despite the fact that a new vehicle might cost more to cover with insurance, most new cars happen to come with a sometimes-multi-year manufacturing warranty. This means that many malfunctions that may occur in the first year or first several years of ownership could be fully covered and repaired at no cost. This warranty can often be renewed to cover a longer period of time, too, so it can be a valuable advantage to buying new.
The mystery of buying a used car can often be wondering what it’s been through previously. Though most dealers will offer you insight into past accidents and mechanical issues, there’s no guarantee these were all reported comprehensively. So a surefire way to ensure you’re getting a flawless ride from the get-go is to simply purchase a vehicle with no previous driving history. This can be a big pro for many buyers, depending on their comfort level with potential repair costs down the road.
This pro can depend on a variety of factors, such as the lending market in your area and the financial services provider available to you, but many trends show that financing for new vehicles can often offer lower interest rates when you get to the borrowing table. This might be particularly true of financing directly through a dealer, as the seller in question may be more motivated to sell new and thus offer a more attractive financing deal.Another route you can take, however, is to simply speak to a local auto lender who knows the market and can give you a number to confidently take to the car lot—interest rate, borrowing power and all. Find out how Sioux Falls Fed can help.