The primary reason for buying a car is to replace the old one. Once the decision has been made, the biggest doubt arises, which is deciding between buying new vs. used cars. The answer to this depends on a lot of factors, and no single answer applies to every person who wishes to buy a car. Both sides in the debate have equally sound reasons that deserve due consideration.
When deciding between buying new vs. used cars, you should examine your unique set of requirements and preferences.
Here are some things you need to ask before you decide between buying new vs. used cars:
1. Do you have a down payment or a trade-in with equity?
If you have a good credit score, you may have no problem buying a new car with little to no down payment compared to buying a used car. This happens because many manufacturers provide incentives for new car buyers that they are unlikely to get by purchasing a used car. These usually include discounts on financing, cash incentives, and rebates.
Additionally, buying a used car will always require down payments, in the form of cash or a trade-in. If you conduct the right research and wait for a suitable opportunity, you can find a new car that offers manufacturer incentives big enough to tackle the down-payment requirements.
2. Can you manage the depreciation involved in buying new vs. used cars?
If a car experiences a supposed depreciation of $7,500 from the time of purchase to the time of selling, that is essentially burning $7,500 off. That amount is something you will not be able to recover by selling the car.
However, depreciation has a lesser effect on car owners who use their car for as long as possible. So, after one or two decades, the car will be so old that it won’t be worth anything either as trade-in or cash. If you opt to buy a used car, you might end up paying a lower price than what you would have paid for a new car. Additionally, buying a used car also means that you have to spend less on personal property taxes and insurance premiums.
3. Can you afford the maintenance and repair costs?
Many car manufacturers provide free maintenance and repairs for the initial years of buying a new car. That is a complete 180 degrees from having to bear the costs of repeatedly repairing a used car. So, if the used car you buy is not in good condition, buying it is like dealing with someone else’s problems. While you can have the car checked by a professional mechanic, some issues may still not arise or be apparent until you make use of the car.
Regardless of how well you have driven your car, it will face a significant amount of wear and tear after traveling more than approximately 30,000 miles. Constantly spending on repairs and maintenance will ultimately cost you more money than buying a new car.