How to Compare Buying New vs. Used Cars
It's time to buy a new car. You can either buy a totally new car from the dealership, or buy a "new to you" car almost anywhere. Many factors need to be considered in making a decision about the best car for you. Compare vehicles carefully and don't be swayed by sales tactics.
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Instructions
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Decide what you need from a vehicle. You might be concerned with room for passengers, interested in hauling options, or seek amenities that make frequent business travel more comfortable.
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Reflect upon all of the costs involved. A low-mileage used car will often cost thousands of dollars less than a new car of the same model while still having a warranty. A new car immediately depreciates (several thousands of dollars) when driven.
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Compare the pricing and finance options of a 1- to 2-year-old car to that of a completely new model. If you have excellent credit and can get the absolute best interest rate, you might be able to get a new-car loan that is very little more than the cost of a used car loan.
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Consider depreciation values. Heavy trucks and popular car models depreciate slower than common cars. Check out "Kelly Blue Book" for depreciation rates (see Resources below).
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Educate yourself on the used car market. You have more protection than you might realize. Make use of vehicle history reports and Internet comparisons of various makes and models to help you find a good used car.
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Think about a lease. Sign a lease agreement for 2 to 5 years. You pay lease payments covering the expected depreciation during that time frame. Many people prefer this option to buying a new or used car outright.
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Imagine the possibilities of energy efficiency. Read consumer reports on your choice of cars. New cars come with the latest improvements in energy efficiency. Used cars (even low mileage) could lack new technology that provides extra gas mileage.
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Tips & Warnings
Only you can make the decision to buy new or used. Mull over the data and take a day to decide what you want. Make your decision away from the salesperson and the car.
Cars over 5 years of age are not generally a good deal. They have too many miles to give good service and many parts are just getting to the point of wearing out.
Don't listen to the car salesman trying to sell you on the idea of a car that is more expensive and tricked out than you need. Stick to you what you need and stay within your budget.
Resources
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Comments
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delcid
Apr 21, 2009
Depreciation should always be factored into the equation. Consumers planning to keep a car for fewer than five years will likely get a better value buying a used car from a recent model year, which already has that initial depreciation built into the price. But if you plan on hanging onto the car for at least five years, it?s alright to go for that temptingly priced new car. The price of a car that?s more than five model years old is largely determined by its condition, rather than the initial selling price.
