The archetypal dad’s advice will sound familiar: new cars are for suckers. Depreciation means you’ll lose all the value the minute you drive out of the lot, so used is the only way to go. Or is it? We think it isn’t that simple.
While it’s true that new cars will undoubtedly lose a good chunk of value, it doesn’t mean a pre-owned car is an answer for absolutely everyone. And we’re going to tell you exactly why.
Should I Buy a New or Used Car?
To make things clear, we’re not going to push you in one direction or another. We believe buying a vehicle is a very personal thing and the question of whether you should go new or second-hand depends on a bunch of variables and your personal situation. Instead, we’re going to give you the real pros and cons of each, putting you in the position of a well-informed consumer. The rest really is up to you.
New Cars: The Pros
Buying a new car isn’t just about having something nice and shiny to show off (though it’s no bad thing!). While a recent survey shows that only 2.3% of people buy new, there are plenty of good reasons why it may be the right choice for you.
On average, new cars are far more reliable than used vehicles. According to the National Highway Traffic Safety Administration (NHTSA), for example, a higher proportion of those traveling in older models will suffer an accident or fatality. Newer models are built to tighter safety standards and also tend to have fewer issues.
You Don’t Need to ‘Know’ Cars
Buying second-hand vehicle can be one of the most stressful experiences around. Am I being scammed? Am I buying someone else’s problem? Will this thing break down next week? Or in the next hour?!
If you don’t know much about cars, it’s a serious issue. New cars, on the other hand, will offer you a smooth ride right from the word go. Of course, negotiating a deal on a new car is still a pain, but at least you’ll know it works. And even if it doesn’t, that’s what warranty is for.
New Cars: The Cons
You knew this was coming: buying a new car isn’t a story that’s just full of plus points. The following may be reasons why new isn’t right for you.
Right, this is the main downside of buying a new car. It’s estimated that you lose 20% of the value the minute you take it off the lot, while the first year will see almost a third of the value dissipate into nothingness (we paint a pretty picture, don’t we?).
They’re More Expensive
Not only do new cars lose their value, they’re also far more expensive. The average new car costs almost $40k, while used models are half that. For the average middle-class family, new cars may be unaffordable.
Used Cars: The Pros
You know where things stand with new cars, it’s time to discuss second-hand cars. These are the advantages of buying used.
Used cars are, on average, half the price of newer models. It’s not just the ticket price either: car insurance is lower, and so is the tax. If you’re buying through financing, the interest you’ll pay over time will also be cheaper.
They Hold Their Value
Compared to new cars, which lose a third of their value in the first year alone, used cars will generally hold theirs for a number of years. It’s common for someone to buy a used car and sell if three years later for just 25% less than what they paid.
You Can Buy a Nicer Car
Buying a new Mercedes-Benz is something that only some people can manage. Buy used, however, and a whole world of opportunities will open up for you. For those wanting to experience a life of luxury on a budget, there are literally thousands of cars to choose from that were once out of reach for many. Thanks to depreciation you can get your hands on a cracking BMW or Audi, or, if you’re particularly adventurous, why not try a classic Rolls Royce!
Used Cars: The Cons
They’re cheap(er), hold their value, and the days where used cars had all sorts of mechanical issues are over. That doesn’t mean they’re right for you.
The Market is a Mess
The thing we all hate is the buying process. Getting the keys to an absolute lemon is what nightmares are made of and while it doesn’t happen quite as often (cars are more reliable and consumers are often protected), it’s still something to worry about.
You May Not Get the Right Background Info
The system for checking out a car’s history is way more advanced than what we had in the 1980s or 90s. You also don’t know how well the vehicle has been treated by the previous owner.
When buying a used car, it’s best not to set your sights on a specific model. The market just isn’t always there. You’re going to have to make compromises and concessions.
Time in the Shop
No matter the condition, how well the previous owner took care of it, or how shiny and new it looks, used cars will spend more time in the shop compared to their newer equivalents.
This article should have made one thing clear: there’s no one-size-fits-all answer. It really does depend on your individual circumstances, requirements, and your wants. For some people, you can’t put a price on that new car smell and knowing everything just works. Others prefer driving something that’s a little older, but ultimately probably (but not always!) cheaper.
If someone asked you ‘should I buy a new or used car?‘ what advice would you give them? How come? Let us know why, and share your own pros and cons by leaving a comment below!