Buying New vs Used

A new vehicle might seem like a bad idea because of the price. However, the higher price comes with a few advantages. For example, when you buy the latest model of your favorite, it comes with perks. New cars, trucks, and SUVs come with a warranty. Combined with an extended coverage plan, you could potentially pay for zero repairs throughout the lifetime of the loan. However, when you consider the used vehicle, you might have none of the manufacturer’s warranty left, which means you pay for all fixes or have to purchase extended coverage, which may leave you with out-of-pocket costs.

Along with those savings, you get access to the latest tech features and model updates. People buy a new vehicle because of these options, such as cooling leather seats, dual-zone temperature control, HD radio, and a Wi-Fi hot-spot. Also, when you choose a brand new vehicle, you get all the safety bells and whistles. Insurance on a new vehicle, especially with a loan, can get expensive. These safety features, such as collision alert, automatic braking, lane-change assist, and lane departure warnings, can help lower insurance a little, possibly evening out the rate increase.

Some consumers prefer to buy a used vehicle. They want more features without paying for a brand new, top-of-the-line model, which can top $50,000. They won’t get a new car discount or a lower interest rate. But they get an affordable loan on a slightly used vehicle that will depreciate slower than if they didn’t wait a year or two to purchase it. Another benefit is sales tax. When the sedan or SUV’s price drops from $50,000 to $25,000 in a couple of years, you only pay half the sales tax. Another cost consideration is insurance. It’s much more expensive to insure a new car. Even with a loan, you’ll most likely pay less when you buy a used car.

Just as there are benefits to buying a used car, there’s also downsides. You’ll have an underwater loan for the duration of the term, and you will pay much more than the car is worth by the time you settle the debt. To prevent owing money if something happens to your vehicle, such as it’s stolen or totaled in an accident, you’ll need GAP insurance, which is another charge. Also, you’re not the only owner. You’re taking out a large loan on a car or truck that you’ll never know the genuine history of, despite the CarFax report. While many people are okay with this, some aren’t comfortable with the thought of the unknown.