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Should I Buy a New or Used Car?

car dealership 2022 31 customer dealership scaled jpg Buying a new car at a dealership | photo by Christian Lantry

Should you buy a new or used car? It depends on your budget and preferences as a buyer. Evaluating the costs, safety features, warranties and maintenance requirements for new and used cars can help you make the best decision for your needs.

Related: How to Inspect a Used Car

Affordability is an important consideration in your car-buying journey. If you’re on a tight budget, buying a used car will typically give you more bang for your buck. You can count on one hand the number of new cars with list prices as cheap as $20,000 or lower. The primary difference in cost between new and used, though, is depreciation: All cars (with few exceptions) lose value over time, but the most dramatic depreciation happens immediately after a car is purchased new, before the new-car smell has faded. From that point, it can be sold only as a used car, and its resale value reflects that.

But buying a used car has its own risks that could cost you over the long run. The fact is, you are buying a vehicle that someone else has owned and driven. You don’t know how it’s been driven or how well it’s been cared for. A used car will almost certainly require more maintenance and may need expensive repairs sooner than a new one, and those repairs probably won’t be covered by a warranty.

In the end, the decision to buy new or used boils down to what you can afford and what will give you the most peace of mind.

The Case for Buying New

For some people, buying a used car isn’t a consideration; they want a brand-spanking-new one that lets them select its color and features. There’s definitely a pride of ownership in being a vehicle’s first owner. Some other advantages include:

  • Reduced maintenance expense: A new car won’t need maintenance for the first several thousand miles, and then only an oil change and tuneup will be required. More manufacturers cover the cost of those initial routine maintenance items. The new vehicle likely won’t need new tires, a battery or brakes during its first few years of ownership. The potential savings of avoiding the repair shop are even greater now that maintenance and repair costs are up due to pandemic-related shortages.
  • Warranty coverage: The manufacturer covers its new vehicles under warranty for at least three years, and some warranties last much longer. Under a manufacturer’s warranty, if something goes wrong with the car, it’s the responsibility of the dealer and manufacturer to repair it. Typically, bumper-to-bumper warranties last from three years or 36,000 miles (whichever comes first) to five years or 60,000 miles. In addition to comprehensive warranties, many automakers provide warranty coverage for powertrains. These often extend past the bumper-to-bumper warranties, and some extend up to 10 years or 100,000 miles. It’s good to be aware of the warranty terms; if you buy a used car, what’s left of the warranty may (or may not) be fully transferable.
  • Safety: Innovations happen so rapidly in the automotive world that just a few model years can mean the difference between having or lacking the most sophisticated safety features — or the best-executed ones. Features that start out as options often become standard over the years, improving their availability on the market. Additionally, automakers often improve the fundamental structural crashworthiness of their models with each redesign, so the new vehicles they sell today typically protect their occupants better than do 5- or 10-year-old versions of the same make and model.
  • Fuel efficiency: As with safety features, fuel efficiency has improved over time, so new cars are typically more efficient than used ones. The mindful shopper can certainly pick a used car with a high mpg rating, but there are more fuel-efficient choices among new vehicles.
  • Peace of mind: If you encounter problems with your new car, you have legal recourse through state lemon laws. If you can prove that your new car is a lemon (definitions differ), you could receive a replacement vehicle or get your money back. Lemon laws apply only to new cars. You also can find out if your vehicle was returned to the used-car market as a lemon by looking at the vehicle’s title or checking out a vehicle history report.
  • Roadside assistance: In addition to a comprehensive warranty, virtually all mainstream new cars and light trucks come with some level of free roadside assistance. In addition, some automakers reimburse you or provide alternate transportation if you are stranded far from home.

The Case for Buying Used

If you’re not married to the idea of buying a new car, used vehicles have their own appeal.

  • Affordability: Even as used-vehicle prices have soared in recent years, buying a pre-owned car will likely cost less, on average, than a new one. Among dealers, the median price for all new cars as of February 2023 was approximately $44,000; newer (model-year 2018-22) used cars came in at a median price of around $31,000; and the median price for all used cars (including older models) was significantly lower at $23,000.

Though used cars can be financed just like new ones, the lower price of used cars makes cash payment more feasible for shoppers who don’t want to have a loan payment — or who want to minimize the loan amount and monthly car payments with an initial down payment that represents a greater percentage of the purchase price.

  • CPO benefits: Another trend that makes buying used a good option is the proliferation of certified pre-owned programs, through which car buyers get a late-model used car and an extended warranty. Dealers and third parties may certify vehicles, but factory-certified pre-owned cars from an authorized dealer have the backing of the automaker and are preferred. The CPO idea started with luxury brands such as Lexus and Mercedes-Benz and has become a popular alternative for all brands. Traditionally, the mileage and age of a CPO car were capped at no more than 80,000 miles or 6 years, but automakers like Ford, Honda and Nissan have now expanded their coverage to include vehicles up to 10 years old.
  • Improved reliability: Cars have been getting more reliable over the years, so buying used is less of a risk than it used to be. Although used vehicles typically don’t carry the same warranties as new ones, the original factory warranty on a new car is often transferable to the second owner. Concerned buyers can purchase extended warranties from a dealership or third party.

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