Car buyers have dozens of decisions to make during the process of purchasing a vehicle. What makes and models fit your lifestyle and family size? What expectations do you have for technology and comfort? One of the most important decisions car buyers must make, though, is whether to purchase a new or used vehicle.
Is It Better to Buy a New or Used Car?
There is no single right answer to this question. Whether a new car or a used car is the right choice depends on specific needs and budget.
When it comes down to it, new cars will be more expensive than used, but they are more likely to include all the desired features, plus reliability and a warranty. Purchasing a used car typically means compromising on some of those features, including limited warranties – or none at all – but for a lower price.
What Are the Advantages of Buying a New Car?
Latest Technology
New cars come with all the latest bells and whistles. That includes advanced safety features like AEB (autonomous emergency braking) and blind-spot monitoring, updated infotainment systems, improved fuel efficiency, and handy driver assistance technologies.
Manufacturer Warranties
New cars from the dealership include a wide range of warranties and coverages that can provide extra peace of mind out on the road. These could include roadside assistance, bumper-to-bumper coverage, a powertrain warranty protecting the most vital and expensive mechanical systems, or even reduced repair expenses during the first year of ownership.
Customize Your Look
Buying new means more options in the make and model. Shoppers have a much easier time finding a vehicle in the desired color with many choices in trim levels and interior features.
What Are the Disadvantages of Buying a New Car?
Fast Depreciation
As the adage goes, “The value of a new car is slashed as soon as you drive it off the lot.” According to Credit Karma, new cars do start to depreciate once they are sold and can lose up to 20% of their value within the first year, depending on the make and model. If planning to own the vehicle for many years to come, then this downside is less important.
However, if the car is financed and then traded in or sold within a few years, it may be difficult to recoup the money owed and cover the remaining balance.
Higher Monthly Payments
New cars come with big price tags. That means much larger loan balances if the purchase is financed with potentially longer loan terms and higher monthly payments.
Fewer Financing Promotions
Dealerships often advertise low interest rates to draw in potential buyers who find out the promotion was only for people with extremely good credit scores. The high qualification requirements set by dealerships often exclude many borrowers with either lower credit scores or limited credit history. Sometimes these promotional offers are only applicable to certain makes and models or for specific loan terms.
No need to be discouraged, though. The solution to the financing obstacles set by dealerships and manufacturers is to shop for a more favorable auto loan option from another lender, like Kansas City Credit Union!
What Are the Advantages of Buying a Used Car?
Less Upfront Cost
Used cars are often the more budget-friendly option with lower purchase prices than new cars. This also means buyers can put less money down at the time of purchase. Alternatively, those who put down a large down payment on a used car can enjoy minimal financing altogether. Because of this, buyers find they have a lot more flexibility when it comes to budgeting for a used car purchase.
Slower Depreciation Rates
Since new vehicles lose the majority of their value the moment they are purchased, buying used puts the price paid upfront much closer to its future resale price.
Get More Car for Less
Since used cars are more affordable than their new counterparts, buyers are often able to purchase more vehicle for less money. That means customers may be able to go for that slightly larger model or access more premium features that would otherwise be unaffordable with a new car.
Lower Insurance Premiums
Insurance premiums are based on several factors, like vehicle value, replacement cost, repair cost, and the likelihood of the vehicle being stolen. Because of this, new cars will come with higher insurance costs than used cars.
What Are the Disadvantages of Buying a Used Car?
More Repairs Sooner
Since used cars are older, batteries, tires, brakes, and other components will most likely need to be replaced or repaired sooner. The condition of the vehicle can vary significantly, even between options from the same year with similar mileages, because of the previous owner’s maintenance habits.
More Research Needed
A lot of research is required to find the right used vehicle. Firstly, inventory at different used car dealerships needs to be compared. Secondly, it will be important to carefully review the vehicle’s history and schedule inspections soon after purchasing.
Which Option is Right for You?
All of the benefits and drawbacks of new and used car buying must be considered in order to confidently decide which is the best choice.
New cars offer you the opportunity to get exactly what you want, while used cars can get you on the road for less money. The right option for you solely depends on your needs and personal financial goals.
Kansas City Credit Union is ready to help you figure out your auto loan financing options. We assist our members with financing for both new and used vehicles. Explore your options and don’t hesitate to get in contact with one of Kansas City Credit Union’s lending specialists!
