Dec 21, 2023
When you’re buying a car, you’ll likely find yourself deciding to choose something new or used. Both new and pre-owned cars have their pros and cons, which you need to carefully weigh to make the right decision. Follow this comprehensive guide to determine whether a new or used car is more suitable for you.
Pros Of Buying A New Car
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Getting a brand new car offers many benefits, including:
- Greater peace of mind: A new car has no history. You don’t have to worry about whether it’s been poorly maintained or damaged in an accident. Since the car is factory-fresh, you also won’t be exposed to any risk if you prefer online car buying.
- Minimal hassle: Purchasing a new car is easy because you don’t need to research its history and get a pre-purchase inspection. In addition, it’s usually easier to get the specific make and model you want. If your dealer doesn’t have your desired model, they can swap with another dealer or order it from the factory.
- Easier and cheaper financing: If you buy a new car, your lender will consider you a lower-risk borrower because they know the exact value of your collateral, which is your car. Besides being more willing to offer you an auto loan, they’re also likely to give a better interest rate.
- Latest technology: A new car comes with the latest technologies from its manufacturer. These technologies result in enhanced performance, comfort and convenience, connectivity, and safety.
- Better fuel efficiency: The latest cars are inherently more fuel-efficient than older cars, because they’re equipped with a variety of fuel-saving features. Examples of such features include lightweight bodies, high-tech turbocharged four or six-cylinder engines, and continuously variable transmissions.
Cons Of Buying A New Car
There are a few reasons purchasing a new car may not be the right option for you, including:
- Higher price: A new car is significantly more expensive than a used car. For instance, a new 2020 Toyota Corolla LE starts at a little more than $20,000, while a preowned certified 2017 Toyota Corolla LE may cost about $14,000.
- Depreciation: A new car loses value the moment you drive it off the dealership lot. It experiences its biggest depreciation in its first three years, which means you may lose thousands of dollars that you won’t be able to get back.
- Higher sales tax: In most states, you’re required to pay tax on the entire price when you purchase a new car. If you buy a used car, you’ll pay much less in taxes because of the lower transaction price.
- Costlier insurance: Generally, a new car is costlier to insure than a used car, especially if you need more types of coverage. For instance, you may skip comprehensive or collision coverage if you’re insuring a used car, but you probably won’t be able to do so if you’re getting a new car.
- Higher repair costs: Once the warranty on your new car expires, you have to be prepared to pay high repair costs if anything goes wrong. This is because the advanced technology in new cars makes them more difficult and expensive to repair.
Pros Of Buying A Used Car
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A used car may be worth your consideration because it offers many benefits over a new car, including:
- Lower overall cost: A used car not only comes with a much more palatable price, but it can also help you save money on insurance and taxes. Also, you’ll probably pay a lower amount of interest over the duration of your auto loan, because the price of the car is lower.
- Less depreciation: As mentioned earlier, a new car loses a lot of value in its first few years. If you buy a used car, you’re actually letting the first owner absorb the big depreciation hit. As a result, you’ll get a significantly lower-priced car that will experience slower depreciation as it ages.
- Greater financial risk: If your car is declared a total loss or stolen, you may find yourself being underwater on your auto loan, which means you owe more than the value of your car. This won’t be such a big problem if you have a used car, because you’ll likely have a much smaller loan to pay off.
- Ability to buy a better car: Since used cars are so much more affordable than new cars, you may be able to buy a better car than you can otherwise afford. This means you can get a roomy Toyota Camry instead of a compact Toyota Corolla.
- Knowledge of problems to avoid: After being on the road for several years, a car will have a reliability record. By reading used car reviews or discussions on owners’ forums, you can avoid less reliable models that commonly experience certain problems, such as transmission failures and faulty features.
Cons Of Buying A Used Car
Getting a used car has its advantages, but it may not be a good option for everybody. There are several downsides to buying a preowned car, including:
- Risk of buying a lemon: When you buy a used car, you’re also buying all the issues the previous owner didn’t want to deal with. Although you can thoroughly check a car’s history and arrange for a pre-purchase inspection, you can’t completely eliminate the risk of buying a lemon.
- As-is sale: With some exceptions such as certified pre-owned vehicles, all used cars are sold as-is. This means you aren’t allowed to return a used car the moment you drive it away from the dealership lot or private seller. This rule applies even if the car breaks down the next day.
- Limited choices: When you’re buying a used car, you may not be able to find the exact car you want. Usually, you’ll have to compromise a little on the condition, mileage, trim level, or color you’re willing to accept.
- No warranty coverage: Used cars that are sold as-is don’t have warranty coverage. If you decide to get a used car, you have to be prepared to buy an extended warranty or pay for any repairs out of your own pocket.
- More expensive financing: In general, preowned cars require costlier financing. Lenders tend to charge higher interest rates for used car loans to compensate for the extra risk involved, which results from the uncertain values of used cars.
If you’re interested in getting a new or preowned certified Toyota vehicle, feel free to schedule a test drive with Panama City Toyota.
