A new car is very enticing, with its shiny finish, highly preferred accessories, and the latest in design. You are proud to drive it past friends, family, and neighbors. But, very soon, the new wears off. Considering the advantages and disadvantages of buying a new car will prevent your making mistakes.
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One disadvantage is the fact that a new care depreciates as soon as you drive it for the first time. If it is not a business use, you will not be able to claim this as a tax deduction. Many think that since it doesn’t require an immediate cash outlay that it is not important. However, it is a loss of good money you have had to pay for the car. A new car loses about 40% within three years.
One advantage is that when you buy a new car, you are secure in its mechanical shape. You are not getting someone else’s headache. Any faults due to manufacture will be fixed quickly and at no cost, being included under the warranty. Another advantage is the fact that interest rate for new cars is often lower that for a used one. However, look closely, because you are borrowing more money for the new car and may well be paying more actual interest.
Advantages to buying used include the fact that the high first depreciation has been experienced by the first owner. In addition, you enjoy a lower purchase price, lower depreciation rates, lower registration costs, and lower insurance costs. Sales tax is also less because you are paying less. Buying directly from the owner saves you commission as well. Buying from auctions or from consignment sales can mean an even better deal.
There are some downsides to buying a previously owned car, however. Repairs that aren’t under warranty are at a great chance of happening. Maintenance needs increase as the car gets older. You also may not be able to determine the former maintenance of the car. If it was not properly maintained, it may result in major repair expenses.
Newer cars have the latest in safety features. These may be features that you will need to add to a used car. This will be an added expense you will incur.
One option to get new car benefits with used car savings is to buy a demonstration model. These cars are almost new but come with the huge discounts expected from used cars. They have very little use and are almost like new.
Another option to get that new car experience with used car prices is to buy a “certified pre-owned” car. Though they have been previously owned, they undergo an intense inspection and may even be covered by a manufacturer’s warranty.
The bottom line for making the decision whether to buy a new or used car will be what you can afford. If you do decide to go with a used one, be sure to get it inspected thoroughly. Use an independent inspection service. This is often provided by motoring associations. Be sure to check the legality of the title as well. Though buying from a dealer is a bit higher, it may save in the long term due to the availability of a good warranty.