Comparing Car Types

In making this comparison, we assumed that cost is a key factor. (If you can afford to buy that brand-new BMW, you probably don't need this guide). The crucial points are:

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  • Initial affordability
  • Depreciation
  • Length of warranty
  • Loss of car if totaled

In addition to cost, we compared new economy cars to cars at two age milestones to demonstrate the differences in each of these categories:

  • Initial depreciation
  • End of basic warranty
  • End of drivetrain warranty

Also influencing this analysis is the fact that the youngest drivers are considered highly likely to bust up their first car.

Comparing Car Types
Weigh the pros and cons of new economy cars, 2-year-old used midsize cars and 5-year-old used cars in various categories.
New economyNew equipment; dual front airbags standard Small, light cars are less safe*
2-year-old usedMay be safer than new economy car; safer than older carsNo distinct disadvantage
5-year-old usedNo distinct advantageSystem failure a possibility; fewer, less refined safety systems
New economyChoice of optionsBase models have few features; not much style
2-year-old usedAll styles available; more features for less moneyNo choice on options
5-year-old usedMore versions of each model available; more features for lessNo choice on options; condition is a greater factor
New economyGood selection of vehicles in the $10,000 to $15,000 rangeYou pay more for new cars; extras drive up price
2-year-old usedGreatest depreciation has passedMidsize used sedan for price of new economy car
5-year-old usedLowest priceThe best-kept vehicles are more expensive; more repairs are likely
New economyYou're likely to have to carry full insuranceDepreciation cost can't be recovered; insurance may increase when collecting a replacement settlement
2-year-old usedIf insurance refunds the market value, and that's the price you originally paid, you break even on the settlementIf not insured, you carry the loss; if insured, your premiums may increase
5-year-old usedLeast cash loss of the three scenariosWithout full coverage, you have no car and no money
New economyLeast likely to need repair; under warrantyNone
2-year-old usedStill under warranty in most cases; powertrain warranties may last longer and manufacturers may extend warranties on certified pre-owned carsIn some cases, warranty has ended; you'll pay more to get a certified pre-owned car
5-year-old usedCars last longer than ever; some warranties exceed five yearsMore frequent repairs; most warranties have expired

*In 2005, small cars from 1 to 3 years old accounted for 106 driver deaths per 1 million registered passenger vehicles. Midsize cars from 1 to 3 years old accounted for 70 driver deaths per 1 million registered passenger vehicles.

Source: Insurance Institute for Highway Safety, based on 2001 - 2005 models

© 2/11/09