First steps to buy a car

Should you buy a new or used car?

When you’re ready to replace your current vehicle with another make or model, you have the choice between purchasing a new or used vehicle. But there is a lot to consider with either option. Here are some of the major advantages and disadvantages to help you decide:

Advantages of a New Car

  • Customizable
  • Includes the latest safety features
  • Not subject to any wear or tear—no accidents or negative history
  • Manufacturer’s warranty included in the purchase price; the contract may also include free maintenance for a specific period
  • Special financing offers and incentives

Advantages of a Used Car

  • Lower price tag compared to new may allow you to upgrade your choice of model
  • More room for negotiation
  • Car has already depreciated to a lesser value
  • Less expensive car insurance
  • Possible incentives on pre-owned models

Disadvantages of a New Car

  • Higher price tag compared to used
  • Depreciates when you drive it off the lot1 – a new car loses 11% of its value the moment you leave the dealer, according to Edmunds.com
  • During the first five years, the car depreciates by 15-25% each year
  • After five years, the car is worth 37% of what you paid for it at the dealership

Disadvantages of a Used Car

  • Additional hands-on research to find the car you want and make sure you are comfortable with the car history
  • Possibility of higher maintenance costs
  • May need to purchase a used car warranty

You probably know the color you want and options that matter like safety features or a great stereo. But you might need to make a trade-off and sacrifice one of your features or options to get the best possible car and value for you. Try to prepare yourself that the candy apple red car you envisioned yourself in might instead be a sleek silver.

Whatever your decision, it’s important to do your research. There are lots of factors to consider including the cost of fuel, financing available and operating expenses, in addition to insurance and depreciation. Take a good look at all the costs before you decide on a new or used car. You may be surprised at what you find—and what turns out to be the right decision for you.

This is intended for informational purposes only.

1 Source: Edmunds.com, Depreciation Infographic: “How Fast Does My Car Lose Value”

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Jim Manelis is a car enthusiast and Chase Auto Executive.
Check him out on Twitter.
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