Whether you go new or used, buying and operating a car is a major expense. It's well worth your time to seriously balance all the costs and benefits against each other.
According to the Bureau of Labor Statistics, the average U.S. household spent 18.1 percent of its income on vehicle costs, second only to housing. Given that nearly one out of every five bucks that you earn will go into your car, you're right to think long and hard about whether it's best to go with new or used.
There are a myriad of issues to consider about your purchase. Here are a few:
This is a big issue for many car buyers. It's simple: The moment you drive a new car off the lot, it immediately loses a chunk of its value because it is no longer "new." Cars generally lose 25 percent or even more of their value each year (although some models hold their value better than others). When you buy used, you let someone else take that depreciation hit.
Obviously, when you buy new, you pay more, and not just for the initial purchase, but also in higher insurance premiums, registration and licensing fees. On the other hand, used car owners have to consider the higher costs of keeping an older car running (such as replacing the brakes, muffler and battery), as well as the possibility of having to undertake a major repair (like replacing the transmission).
The advantage is clearly in the new car camp here. Basic warranties are standard with new cars these days, and you can buy extended warranties for an additional cost. While some dealers may offer a limited warranty on used cars, they are typically much weaker than what you would get from a new car. Consider a Vehicle Protection Plan from Amplify which covers major mechanical breakdowns and other unexpected surprises.
Many new car buyers tout not having to worry about a major breakdown as a reason for going new, but the truth is that some used models may actually be far more reliable than some new models. One thing is for certain, though, and that's that the new car buyer knows exactly how the car has been treated. Protect yourself before you buy a used vehicle by having it professionally inspected. Amplify has partnered with Auto PI, a local company that performs onsite inspections to alert you to current, past and potential problems before you buy.
There are devotees of Consumer Reports out there who would never dream of buying a car without knowing that model's track record for repairs and defects. When you buy a new model, however, you can only hope that it will prove to be reliable.
The "shiny chrome" factor is a big one for many new car buyers--nothing else can quite replace the feeling of knowing you're the original owner of a new car in mint condition. Used car buyers have to settle for freshly detailed.
There are pros and cons to both sides of the argument, and ultimately you must choose what makes you happy. Financially, it often makes more sense to purchase a late-model (1-4 year old) pre-owned car instead of a new model. But, there's nothing quite like that "new car smell" to brighten your morning commute. Either way, never purchase outside your budget and always allow for those unexpected expenses owning a car seems to bring.