New vs. Used is a comparison worth making. Many buyers have preconceived notions about purchasing a new vs. used vehicle, and both options have pros and cons. Keep reading to find out our pro tips of new vs. used.
Benefits of Purchasing a New Car
Buying a new car has its perks: low to no mileage, great body shape, and that new car smell! These are other advantages of buying new:
Enjoy the Bells and Whistles of a Luxury Car Without the Price Tag
Your car doesn't need to be a luxury model for you to enjoy many of the features that were once exclusive to top-of-the-line brands. Power windows and locks, backup cameras, and safety features are mostly standard. You won’t need to pay extra to enjoy them.
Newer Cars Are Viewed as More Reliable
It’s no surprise that newer cars are more dependable for a variety of reasons:
- A mint-condition engine is less likely to break down.
- A significant amount of time will pass before needing to make any major repairs.
- Lenders are more likely to grant a loan because of the low risk associated with newer vehicles. This means you will also have access to more financing options when purchasing a new car.
Other New Car Considerations
While these factors are undoubtedly worth some attention, there are others to consider as well:
- Your car will begin to depreciate as soon as you drive it off the lot. The value of your vehicle will often decrease by 15 to 20% within the first year.
- There is less room to negotiate. Most dealerships prefer to sell a new car at MSRP and are not inclined to engage in haggling.
- In some cases, you may be able to get a lower price. For example, dealers often offer big savings on new cars during holiday sales events.
Benefits of Purchasing a Used Car
While new cars come with all the latest features and a certain level of prestige, a used car can be a great alternative. A previously owned vehicle that is certified, or still has life within an original warranty, can provide a lot of value.
Buying a Used Car Is More Affordable
Researching used car models and reading reviews may seem like a lot of homework, but it’s time well spent. When you’re ready to shop, you’ll be educated on competitive pricing for many different brands and types of vehicles, which means:
- You can then walk into the dealership armed with information to use to your advantage.
- You can shop with confidence, especially if you’re working within a tighter budget because you will have already determined a manageable monthly payment.
Interest Rates Are Typically Lower
Cost savings is a compelling benefit of buying a used car:
- A used car has already depreciated, so the cost will be significantly less than that of a new car.
- Interest rates tend to be lower on used vehicles. A lower interest rate combined with a lower principle balance, often equates to considerable savings compared to a new car purchase.
Access to Vehicle History and Recalls
Reports of a car history are available to you and can help alleviate concerns regarding a used car’s past.
- A dealership will usually offer a full history of the car you're interested in buying to reassure you that you’re making a sound decision.
- While researching your preferred vehicle, you can learn the car’s nuances from other people who had previously owned the vehicle.
How to Get the Best Price on a New or Used Car
There are several steps you should take to get the best price on a new or used car:
A little research can give you the leverage you need to negotiate the best possible price on your next car purchase.
Shop around different dealerships and see what they offer. If you find a dealership that offers an inclusive warranty and another that offers a lower price, try to get one of them to match.
Wait for a Holiday Sale
Dealerships often promote big savings on both new and used cars during the holidays.
Consider waiting to buy your vehicle during a holiday sale event for bigger savings and the opportunity to negotiate further.
Leverage Car Valuation Sites
Get Pre-Approval Before Looking at Vehicles
Before you walk into a dealership, consider getting pre-approval through your lender. This gives you a number to work with before you fall in love with a car that might be outside of your budget. Pre-approval also saves time when it comes to signing the paperwork.
Skip the Dealership “Extras”
Car salesmen are in the business of upselling to make additional commission. This ultimately adds to the overall expense of your purchase.
Skip the “extras” like roof racks, windshield and tire protection. These extras tack on added costs that may not provide any real benefit to you.
Choose the Right Term Length
Longer loan term lengths may be attractive at first glance because of the smaller car payment. However, Longer loan terms mean more interest for the life of the loan.
Resist Buying “Too Much” Car
Think about your lifestyle and how you use your vehicle. Buying a large, expensive, or less “practical” vehicle could hurt your wallet over time.
As a general rule, you should spend no more than 10% of your monthly take-home pay on transportation. This includes all expenses related to your vehicle like the car payment, gas, and insurance.
Let Leaders Credit Union Help You Decide
Do you want to learn even more about new vs. used cars? We are happy to help.
At Leaders Credit Union, we have excellent resources and competitive financing options. We are here for our members and can help you make the right decision.
Our loan application process is tailored for your convenience. We offer flexible loan terms and low-interest rates. We are also readily available when you need assistance. Our partnerships with reputable auto dealers make the car buying process as seamless as possible for you.