New Vs. Used: Which to Choose
You’ve saved the money for a down payment, now it’s time to choose your new car! This is where the dilemma of purchasing a “new” or “new to you” car comes up. Manufacturers are clamoring to sell new vehicles, and offering several discounts, new safety features and rebates to entice buyers to the showroom. The economic tailspin has also forced many to downsize, causing an influx of pre-owned vehicles for sale at the lot and through the owner.
With such choices available, it is difficult to decide on whether a new or used vehicle is appropriate for your budget, or peace of mind. Before hitting the lot, scouring the internet or checking the classifieds, consider the pros and cons of purchasing a new or used vehicle.
Buying a New Vehicle
If the vehicle’s maintenance is high on your priority list, a new car might be for you. A car off the factory floor won’t require any maintenance for several thousand miles. Many manufacturers are offering free maintenance, including scheduled oil changes, tire rotations and replacement of auto parts and vehicle inspections for the first 3 to 5 years, or 30,000 to 50,000 miles, of the vehicle’s life. Check with your local dealership or the manufacturer’s website to learn about any specific maintenance incentives.
A new vehicle’s reliability provides peace of mind to the purchaser, which no amount of savings or incentives can match. Every state protects new vehicle purchasers with Lemon laws, which allows the purchaser the right to legally return the vehicle within a set amount of time under certain circumstances. Research your state’s particular Lemon laws and learn how to file a breach of warranty claim, which is necessary if the vehicle should fail, within the set time limits.
Warranty and Roadside Assistance
The majority of manufacturers offer a new car warranty of at least 3 years or 30,000 miles. Many luxury or high-end manufacturers raised the bar by offering warranties that last in excess of 5 to 7 years, or sometimes even more. The popular bumper-to-bumper warranty covers several components, including air conditioning, fuel systems, certain electrical components and the audio system. Several manufacturers offer free roadside assistance for the life of the warranty as well.
The biggest downfall of purchasing a new vehicle is depreciation. On average, a new car or truck loses 40% of its value within the first three years. For instance, you purchased a new car off the lot for around $30,000. One year later, and your car is now worth $22,500. After two years, the vehicle has depreciated to a value of around $19,800.
Your budget is probably another big consideration when purchasing a car. Walk through a local car lot and look at the prices of a base model brand new vehicle. The fully loaded, four year old version of that same make and model car is probably about the same price.
Your budget will thank you if you decide to purchase a used vehicle. The economy’s present predicament is in your favor, and many dealerships and private owners are looking to unload a vehicle for less than it’s worth. Shop around and you’ll be amazed at the prices of pre-owned vehicles.
Once again, the bad economy is good for anyone looking to purchase a pre-owned automobile. Several families are being forced to give up that second vehicle, downsize to a cheaper model or abandon their loan completely. Combine this with sluggish sales, and you won’t find it difficult to locate the exact make, model and color vehicle you’re after. This is especially true if you’re in the market for an SUV, as the rising gas prices have caused many to downsize for a compact or mid-size car.
When you purchase a late-model vehicle from a participating dealership, you can reap the rewards of a certified pre-owned vehicle. When you see the sign “certified pre-owned” it generally means the vehicle is still under the original factory warranty and through inspection was performed by a licensed mechanic. This translates into the savings of a used vehicle and the comfort of knowing it’s still under warranty.
Sellers and Scams
Buyer beware when purchasing a used vehicle, especially from a private seller. You’re not only buying the car, but whatever the previous owner did while driving it. Purchasing a vehicle history report is one way to protect yourself against an unscrupulous seller, but don’t put all your eggs in one basket. Inspect the car thoroughly or bring along a mechanic or someone just as car-knowledgeable. Take the car for a test drive and don’t be afraid to walk away from a suspected lemon.
Reliability and Repairs
On day one, it’s cheaper to buy your fully loaded used car than its equivalent new model. Down the road, you’ll spend more money on general maintenance and repairs, especially if the car is an older model. The long term financial obligation of purchasing a pre-owned vehicle should be a consideration when making your financial decision, especially if you plan to own the car for several years.
Do your homework, check your budget and ponder the pluses and minuses before purchasing a new or pre-owned vehicle. Shop around for the best price and don’t be afraid to haggle, even with a private seller.
Edson Farnell has been writing about cars for several years, and has been working on them even longer. Edson’s current project is sourcing hard to find BMW parts for his latest restoration.