Should I buy a new car or a used one?  This is an age-old car buying dilemma for most consumers.  Most financial experts say that it’s always smarter to buy used.  Let someone else pay that initial depreciation!  Seems like a pretty easy decision, huh?  Unfortunately, like most things in life (and the car business), it’s more complicated than that.  Here are six factors to consider when deciding between new vs. used:

1.  Your Budget – Your budget may make the decision for you.  If you can only afford a $10,000 car, you will most likely have to buy used.  While you can occasionally find new cars in this price range, you will end up with a base model econo-box with poor quality ratings and minimal convenience options and safety features.  You are better off buying a used model that was a safe, reliable vehicle to begin with.  Don’t be tempted to buy new and use a long loan term to fit the monthly payment into your budget – that can get you in financial trouble and cost you much more in the long run.

2.  Depreciation – The average vehicle depreciates at least 20% in the first year of its life.  Some vehicles depreciate as much as 40% or more (i.e. Range Rovers, Escalades, and pretty much anything wearing a GM or Chrysler badge these days).  Other vehicles, like Hondas and Minis, hold their values very well.  If your desired vehicle has a high depreciation rate, then it makes sense to buy “slightly used” and save yourself a good chunk of change.  However, if your dream car holds its value exceptionally well, then you might want to pay just a couple thousand more for a new one with a full warranty.

3.  Availability – If you want a model that just came out, then you will obviously have to buy new.  But, if you are considering one that has been out for at least a year, then check the availability of used models in the secondary market.  In today’s economy, people are holding on to their vehicles, which is reducing the supply of used cars on the market and increasing used car prices.  Some models are hard to find and priced so high, that it makes more sense to buy new.  However, if you are looking for a model that is popular with the rental car companies, then you should have plenty used ones to choose from.

4.  Interest Rates – Finance rates for used car loans are typically 2 points higher than for rates for new cars.  Why?  Because banks consider used cars to be a higher risk.  If you are considering a “slightly” used car that holds its value well, do the math to calculate the total cost of financing the car over time and see if buying used will really save you money. 

5.  Risk – No matter what, buying a used car comes with some degree of risk.  A used car, by definition, has been subjected to a certain amount of wear and tear, not to mention someone else’s driving and maintenance habits.  Some vehicles have spent most of their life on the highways, others in more strenuous stop-and-go city traffic.  Some vehicles have been garaged and maintained religiously according to the owner’s manual.  Others have been left out in the elements and have never tasted fresh oil.   While a Carfax report may reveal obvious signs of abuse such as accidents, theft and flood damage, it may not show everything – especially if the “accident” was between the car and its owner’s mailbox. 

6.  Maintenance Costs – The maintenance required during the first year or so of a vehicle’s life is usually limited to oil changes, tire rotations and other relatively inexpensive items.  Some manufacturers even cover the cost of these routine maintenance items for the first few years.  A used vehicle, on the other hand, may require the replacement of more expensive parts such as tires, brakes, a battery or worse.   When you purchase a new vehicle, those expensive repairs often don’t come along until you have already paid off the vehicle loan (assuming you financed it properly).  On a used vehicle, expensive repairs can pile up on top of your monthly loan payment, straining your budget.  And, by the way, most repairs are “routine maintenance” and are NOT covered by an extended warranty.

Ultimately, the decision to buy new or used comes down to what you car love, what car you can afford, and what will give you peace of mind.

Still not sure which way to go?   Call Women’s Automotive Solutions for a complimentary consultation.  We’ll look at your unique situation as well as the current car market to help you decide which option is right for you.  And, no matter which way you decide, Women’s Automotive Solutions will get you the best deal!