Previously, we looked at some pros and cons to buying a used car. So today, let’s look at the flip side of that, and take a look at the pros and cons of buying a new vehicle. For some, it’s clear that they will buy a new vehicle, while for others, they have never bought anything but used. Although there is no right or wrong option, you may not have considered a few nuances that could either put you behind the wheel of a brand new car, or simply drive something pre-owned.
1. Rebates, Sales Events, and Incentives
This is perhaps the most recognizable push towards buying a new car. Nothing is more tantalizing than that beautiful ride displayed on your screen, but why pay full asking price? Simply wait for the manufacturer to run a good sale. A good sale would be any combination of a low interest rate, cash back, and freebies. The best incentive to look for is the low interest rate; especially if that low interest rate happens to be 0%. This will help you the most in the long run, allowing you to put your entire payment towards the purchase price, and possibly paying off the loan sooner.
Another great thing to keep in mind is shopping for last year’s model. While it probably looks the exact same as the “newest” model, it has the previous year on it. Car dealerships want these off the lot. The longer they sit there, the more money they lose and the “older” the car becomes. If you look for these vehicles, you can usually get an extra couple thousand knocked off the purchase price along with a good interest rate.
A little less obvious, but no less important, are warranties. Having a good warranty on your vehicle can be a real life-saver for both you and your car. While the occasional malfunction can pop up in any new car, accidents also happen and sometimes you need a little help. The large majority of vehicles on the market will come with a solid warranty (or three) each specifically designed to help you with most issues you could have. And with most of these warranties lasting for around 3-5 years, you can have fewer headaches.
Although having a warranty is not a cure-all, it does give new vehicles a strong advantage over buying used. With most used vehicles, you will either have a very limited, short-lived warranty or no warranty at all. You may have an amazing warranty and never use it; but it is great to have in case you ever do need it.
3. Interest Rates
Although I already mentioned it earlier, I wanted to say a little more about interest rates. You can buy a car anytime of the year; however, it’s not always practical. If you wait until there is a 0% interest deal, you can really do yourself a favor. Every payment you make, no matter how much, is actually going toward the price of the car. If only my house payment could be that way! But seriously, if you’re going to make payments on a vehicle, don’t waste your hard-earned money on interest every month.
Surprisingly (for some), this point is a strong advantage over buying used. Depending on where you intend to buy a used vehicle, you probably won’t be getting 0%. Of course, if you’re not doing a payment plan, this point doesn’t even apply. But for some of us, we aren’t able to spend that kind of money up front. What it all comes down to is that it’s really easy to find a 0% interest deal on a new vehicle, while it’s really difficult to get 0% on something used.
4. Know What You’re Buying
Simply put: you know what you’re getting yourself into. Buying a new car is like buying a new outfit. You look at what’s there, choose your favorite color, and pick some accessories. Hopefully your wardrobe is not as expensive as a new car, but hopefully you’ll know exactly what you bought. When you begin comparing vehicles, you’re starting with the foundation. How many miles per gallon does it get? What is the safety rating? Do I want the base model or a few more bells and whistles?
Buying a used car can become tricky. Every used car will have its own specific set of problems and quirks. Even if you have a thorough inspection performed, sometimes there are things that are overlooked or impossible to notice at first glance. Other issues come up within a few months of owning your new (used) car. Within a few weeks of owning our car, we discovered the headlight was having issues. Even after replacing it (twice), the headlight continued to malfunction. Buying a new vehicle is the easiest way to know what’s under the hood.
5. Starting with a Clean Slate
At first glance, it may seem like this point is a repeat of the last one. Don’t worry, I haven’t become senile…yet. Simply put, new cars give you a peace of mind. You will not have to wonder if the previous owner got into a fender-bender, or if the spark plugs need to be replaced. The average new vehicle will have less than 20 miles on the odometer. You can drive off the lot feeling confident that every part is in top condition.
While you may be “paying” more now, it really comes out the same in the long run. We bought a used vehicle a little over two years ago. Within that time, we have spent a couple thousand dollars on tires, spark plugs, shocks, a headlight… Need I keep going? Trust me, it added up. And this was all money paid up front. And being a newlywed didn’t help any with juggling these repair costs. What money we saved on the monthly payments eventually went towards the repairs and upkeep of an aging vehicle.
6. Reputable Seller
The last advantage that I want to point out is the seller advantage. If you are buying a new car, you will most likely be buying from your local dealership. This ensures that you will get a fair deal and will get your financing worked through the actual manufacturer. Both are great incentives to buy new. Although you can buy a used vehicle from a dealership, some people will resort to other means, such as used car lots and the classifieds. The end result can be anything less than satisfying, and even dangerous if you are not careful.
When it comes to buying from a dealership, find one that you like. One that appears honest and works well with you. I have been to both good and bad dealerships, and it is usually easy to tell which is which. If they are diligently trying to get you the best deal on the specific model you are looking to buy, you are usually in good hands. I recently visited a *cough* dealership, and it definitely was not a good experience. I went in looking for a new vehicle and the first offer made to me was “How would you feel about a used one, made by a different manufacturer than what you’re shopping for?” After going downhill from there, Tim and I managed to hold in our laughter until after we left.
Needless to say, find a good dealership and go from there.
1. Down Payment
While it is probably obvious by now that I am in favor of buying new, not everything is sunshine and roses. If you find that the payments are not going as low as you need them to, or the financing is simply not working out in your favor, you may be required to make a down payment. If you decide to do this, it can help you out a little in the long run; however, you will be out of (x) number of dollars for the time being. You may not even be able to afford a down payment. While this is not always a deal-breaker, for some, a down payment can be a major disadvantage to buying a new car.
2. Higher Payments
Possibly one of the biggest factors for buying either new or used is the amount of the payment. And in this case, buying a new car almost always means a higher payment. No matter how many incentives you get or how low your interest rate is, nothing can get your payment down as low as a used car. Even for a base model, you’re usually looking at paying a couple hundred every month. Whereas with a used car, your payment may cost as little as $100 every month; that is, if you even have a payment.
Because your income is so crucial to how much you can afford on your car every month, a lot of thought needs to go into this before you make a decision. What it really comes down to is, how do you want to spend your money? Yes, a used car is initially cheaper, but you may end up spending a lot of extra money on repairs.
3. Good Deals?
Every year, car manufacturers spend countless dollars on advertisements for the newest models, biggest incentives, and lowest prices. While all of this is true, it can also be very difficult to find these good deals. A good time to buy a new car is either around Memorial Day/4th of July or at the end/beginning of the year. Other than that, you’ll just have to keep an eye out for who’s advertising what. This can be even more difficult if you’re looking to buy a particular make and model; not impossible, just difficult. And sometimes you find the right incentives and prices, but perhaps the interest rate isn’t the best. As I mentioned earlier, try waiting for 0% interest, along with cash back deals and last year’s models. If you can’t get a car at that time, you may end up paying a lot extra in the long run.
Getting financed can be hard. Getting financed for a car can be even harder, if you’re buying new. Buying used is easier for some, especially if you buy from someplace other than a dealership. Many car lots will advertise financing for those who have bad or no credit. Meanwhile, a dealership will be scrutinizing your credit score for anything that throws up a red flag. In a lot of ways, the entire deal is based off your credit. For some this isn’t a problem, and for others it is. Just determine where you’re at and what works best for you.
Whether you own a new or used car, be sure to weigh the pros and cons to make sure you’re getting the most for your money. Just like buying a used car has advantages, so does buying a new car. If you find yourself spending way more money on repairs than you would like to, consider some of the points I mentioned and maybe you’ll discover that a new vehicle is right for you.