Should You Buy a Used or a New Car?
Many people swear that the only good car to buy is a used car:
- “You lose 20 percent of a new car’s value as soon as you drive if off the lot. Let someone else lose that much money immediately!”
- “Used car dealerships often make low-mileage and late-model used cars look and drive almost like new. They’re a great value!”
Both of these statements are true. But it may be the case that buying a new car is better for your situation. Here’s how to decide if you should buy a new car or a used car.
- Maintaining a used car could cost you more time and money.
The older and the more miles on a used car, the more you may end up paying in time and money (and more quickly the car will need repairs). You can minimize the risk of purchasing a used car that will need extensive repairs and maintenance by having any used car you’re thinking of buying inspected by your personal mechanic and getting a detailed vehicle history report. (Companies such as CARFAX® and AutoCheck can provide you with these, if the seller can’t or won’t.)
Kelly Blue Book estimates that a two-year old car will cost you about $2,000 in maintenance and repair the first year you own it and about $1,000 the next year.
- Can you afford the depreciation of a new car?
If taking a 20 percent hit when you purchase a new car for $30,000 is something you can afford, go for it! (Just understand that the $6,000 immediate depreciation on that new car is something you can never get back – or spend on something else you need.) You will spend less money maintaining and repairing it than you would a used car for the first couple of years.
Still, notice from the example in number 1, above, that even in the first two years of ownership, a used car will still see “losing” just half in maintenance/repair fees than you would lose in immediate depreciation.
- New cars spend less time in the repair shop; you’ll be able to use it more often.
While a used car will be spending more time at the mechanic’s, this time will be just a day or two here and there. As time goes on, both used and new cars will be spending longer time in the auto shop for major repairs. Still, a newer car will take longer to get to those longer and more expensive repairs than a used car.
- Will you own a new car until it dies?
Buying a new car can be a good financial choice if you keep it for years, repairing it until it can be repaired no more (or the costs for repairing it are more than the car’s value, or a year’s worth of monthly payments).
More and more people are keeping their cars until they give up the ghost: as of 2012, people surveyed said they planned to keep their new car for six years, while the average age of a car on the road then was 11.
Still, as mentioned above, we feel (and we know we may be biased) that a new car’s depreciation factor, coupled with the fact that many low-mileage used cars run and look almost like new, tips the scales in favor of buying a used car over a new car.
If you’d like a great, low-mileage used car, check out a PAACO location near you and ask us about our vehicles that come with a limited warranty. Contact us at 877-810-4555 or send us an e-mail message.
Image courtesy of Stuart Miles/FreeDigitalPhotos.net