Is It Better to Buy a New Car vs. a Used Car?
If you’re considering buying a car, one of your first considerations must be whether you are looking for a new or used car. Here are a few considerations to keep in mind when making this decision, but which ones matter most depend on your unique situation.
Reliability: Advantage New Car
A new car is going to offer a big advantage in reliability. The car is brand new, and if there is a small chance that it will be a lemon, it’s also covered by the full manufacturer’s warranty. This not only includes service for warranty-related problems, but it also it sometimes includes regular maintenance, rental car for warranty-related repairs, and more.
Used cars are slightly more likely to be problematic, even if they’re not very old. There are several reasons why:
- People are more likely to want to sell a not-very-old car if it’s been giving them trouble
- There’s no guarantee that the original owner stayed on top of all required service and maintenance appointments
- Most used cars come with no warranty, and if they do have a warranty, it’s less extensive
Price: Advantage Used Car
On the other hand, used cars are a relative bargain when it comes to price. You can typically get a used car for much less than the cost of a new car.
The exception has been in recent years when some used cars are selling for close to or more than their new version. That’s because a dealership will sometimes sell you a new car even if they don’t yet have it on the lot, but used cars have to be ready to drive off immediately. Thus, used car prices are subject to scarcity while new car prices aren’t. Needless to say, this is a relatively rare situation that will likely resolve once supply issues for new vehicles resolve and inventory levels return to normal.
Financing: Push
Financing can be equivalent for new and used cars. Often, people will give the advantage in this category to new cars because dealers offer special incentives for car buyers. However, these incentives aren’t available to all borrowers, and if you don’t qualify for the incentives, the built-in financial department might try to stick you with a predatory loan because the dealer knows they’ve already sold you on the car.
Financing a used car comes with the freedom to shop around and find a lender who will give you great terms. While you can do this when buying a new car, that doesn’t lend an advantage to a new car, it merely makes them equal.
Ease of Shopping: Advantage New Car
When it comes to finding a car, it’s much easier when you’re buying a new car. Dealers have lots set up all over your community, and you can just drive to them to look at all the cars. Pick your model, your options, and your color. Even if it isn’t available to drive off the lot that day, you can put in the order for exactly what you’re looking for.
Buying a used car involves driving to lots to see what’s in stock. The selection is likely to be limited. You might find the model you’re looking for, but it won’t have the options you want. Maybe you can get the options you want, but it’s got too many miles on it (or it looks like the miles it has have been hard miles). You have to settle for whatever color it comes in. Beyond dealers, you might find yourself driving to personal homes of the old owners.
Depreciation: Advantage Used Car
Used cars have a major advantage when it comes to depreciation. Car depreciation happens quickly in the first year or two of ownership, with a car losing potentially thousands of dollars in value over the first month of ownership. That’s value you’re paying for and losing immediately. You’ll feel this most if you get bad financing terms. With a high-interest loan, you are likely to end up underwater on a new car if you don’t pay ahead or refinance your car loan quickly.
When you buy a used car, someone else has already paid for most of the depreciation. Most used cars hit a value that remains stable or even appreciates over time with proper maintenance. Buying the right used car can be a smart investment.
Lifespan: Advantage New Car
If you’re looking for a car you’re going to have for a long time, it’s best to be looking at new cars. Modern cars are designed to last longer than cars in the past. Especially since the 2010s, car lifespans have been increasing to the point where it’s not unusual for cars to last 200K or 300K miles.
Older cars tend to have shorter lifespans, especially if they aren’t well maintained (and it’s hard to really know how well a used car was maintained).
Looking to Refinance a Car Loan? iLending Makes the Process Easy
Some people consider buying a car just to get away from the bad loan on their current car. However, if you’re actually happy with your current car, just not the car loan, maybe refinancing is a better choice.
At iLending, we utilize our unique You First Approach™ that puts you in touch with a personal loan consultant who can help you find the best car loan for you and your situation. Your personal loan consultant will listen carefully to your goals from the refinancing process and then review our vast network of local and nationwide lenders to find the best options that meet your needs. We’ll review these options with you, answer any questions you may have, and recommend the best solution to achieve your desired goals.
Please use our application tool to see if you qualify for refinancing – it takes just minutes.
What would you do with an extra $148* in your pocket?
