Car Deals

Are you buying a New or Used Car?

First thing you need to remember is that cars depreciate in value quickly in the first years, and old quote says that a new car depreciates half its value after driving it off the lot, this is a bit exagerated but it drives the point. After the first couple of years a car will be worth between 60 to 70% of its value.

When you are buying a new car, you are buying the assurance that you are the first one buying the vehicle, the brand “new car smell”, and the perhaps that the car will work perfectly. However, as we know from automotive news, this is far from correct. Sometimes there are manufacturing defects, car recalls, etc.

There are arguments for buying a new car, for example, to buy the peace of mind that the car is brand new and free from defects (this may or may not be true), you don’t need to worry about repair costs (if the car is under warranty), financing maybe more attractive for a new vehicle, incentives to buy a new car.

However, you can also buy a recent model used car. For a recently used car, the depreciation value of the first few years of the cars life will be already factored into the price. This may lead to an even better deal for you including the car with all the bells and whistles that you would not have been able to afford have you bought the car new.

This, does not mean that the car will not have defects. For example, your “brand new” used car, may not be accident-free, the car may have issues that you may not have noticed when you test drived the car, such as transmition, poor maintenance, the milage may have been altered, engine problems, etc. This possible repair costs should factor into the decision of purchasing an used vehicle.

If you decide that you want to buy an used car, here are the points that you need to consider:

A) Research, the more you know about a car, the manufacturer, possible issues with the car model, read reviews, consumer reports, gas efficiency, how reliable the car and model will be. The more research that you do, the more accurately you know about possible problems, costs of repair, cost of upkeep, traspotion expenses.

B) Know what you can spend. I know it sounds silly, but as with a new car you may be able to finance an used car in good condition with all the bells and whistles, with an small down payment and monthly payments. However, consider that with the cost of financing the car price may be more expensive that you originally expected to pay. Also, there may be circunstances that may be out of your control such as job loss, accidents etc. that may prevent you to make the monthly payments.

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C) Consider other fixed costs, such as insurance that you will need to ad to your monthly payment should you decide to finance the vehicle.

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D) If you decide on a vehicle, check out the history vehicle report, see if the car has been part of a collision, if the car has been salvaed, rebuilt, water or fire dmamged, if the odometer has been rooled back, does it have suspect miles, has the vehicle being stolen, part of a fleet service, or an ex police or taxy car.

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