Comparing When to Buy New or Used VehiclesJul 28th, 2020
Whether you are planning on paying cash, leasing or financing, one of the biggest decisions to make when purchasing a vehicle is should you buy new or used? Why is this decision so vital? Depending on your driving habits and financial situation you could be leaving thousands of dollars on the table by choosing the wrong option! Knowing the advantages that each choice offers allows you to make the correct and informed decision the first time. Below we will discuss the pros and cons of each, regardless of how you intend to pay for the vehicle. All the information below assumes you are comparing the same or similar vehicles (Hyundai Elantra vs Honda Civic for example) and are deciding between new and used in those models.
Advantages of Buying New
Buying a new car is more expensive than used but comes with a variety of benefits:
- 1. First, you are the first and only owner. Beyond the great new car smell, you will have the satisfaction of knowing exactly what the true history of the vehicle is.
- 2. You get the benefit of the full factory warranty. While new car warranties vary, you get the full benefit of the manufacturer’s warranty that is included with the vehicle.
- 3. Buying a new vehicle gives you access to the latest technology and safety features all backed by the warranty we talked about earlier. Technology is changing quickly and a new vehicle gives you all of the greatest and latest.
- 4. A better interest rate. Most manufacturer’s offer a subsidized or subvented lower finance rate or lease rate along with new car incentives. This can give you a lower cost of borrowing compared to buying used. So, it is important to compare not only the up front price but also the interest charges over the term of the loan.
- 5. Customization options like choosing a specific colour, trim options, and accessories are also much easier when buying a new vehicle because you aren’t limited to one specific car at one dealership.
- 6. If you just want the lowest payment, it may surprise you to know that a new vehicle often has a lower payment than a similar used vehicle that is priced lower. While this seems counterintuitive there are a couple of good reasons
- 7. A lower interest rate as mentioned above.
- 8. A longer term available on new vehicles – sometimes up to 84 months allows you to spread out the payments over a longer time period.
- 9. The ability to take advantage of a leasing program which can make the payment even lower.
- 10. Leasing is more popular with new vehicles. If you are looking to take advantage of the benefits of leasing your next vehicle, a new car is probably your best option.
- 11. Lastly, the vehicle is brand new so you control the entire service and accident history of the vehicle and don’t need to worry how the previous owner treated the car.
Advantages of Buying Used
Many smart buyers only buy used vehicles. Here are some of the reasons why:
- 1. The biggest advantage of buying used is the lower vehicle cost and reduced depreciation. Because vehicles typically depreciate the most in the first few years, used car buyers pay much less in depreciation. The first owner has taken the large depreciation (reduction in value) when driving it off the lot. Many new vehicles will depreciate up to 30% during the first year of ownership so savvy used car buyers prefer to buy a vehicle that is at least a few years old.
- 2. Used vehicles are also less expensive to insure. Because the value is lower, the replacement value is also lower and accordingly, your insurance premium will be less.
- 3 .Used cars do not come with any additional new car fees like freight or transportation and pre-delivery inspection (PDI) which can cost you thousands of dollars.
- If you are concerned about warranty coverage, a certified pre-owned vehicle may be your best option. With a certified vehicle, you get a late model car or truck with a warranty similar to a new vehicle and sometimes even qualify for a discounted interest rate.
- 5. Rather than buy a new vehicle with a new warranty, you can often just purchase an extended warranty on the used vehicle that you are buying. You may end up with as good or better warranty coverage than even a new vehicle offers and still spend thousands of dollars less.
- 6. All vehicles are used, the minute they drive off of the lot. Why worry about the odd imperfection, scratch, or ding if you are just looking for reliable transportation.
- 7. Overall, the total cost of ownership is usually less. Even if you are financing your used vehicle and pay a higher interest rate, the thousands of dollars in upfront savings will usually result in a lower cost of ownership.
Ultimately, there is no right or wrong answer to the question of new versus used. It really depends on what is most important to you.
Still unsure which option is best for you? Take advantage of a free consultation with one of our sales consultants. They can help you evaluate your automotive needs and look at both new and used vehicle options.