Factors to Consider When Choosing a Used or New Car
Posted Monday, Jul 03, 2023
Buying a car is never an impulsive process (unless you’re Jay Leno). It usually involves a fair amount of consideration, soliciting opinions, and spending hours on end searching frantically through the websites of several car dealerships.
What Is the Right Car for You—New or Used?
1. Consider the Price Gap
For years, the fiscally savvy move was to go for a used car, preferably one that has a few hundred miles on the odometer and is in good condition. The idea was that a used car while lacking the necessities, such as an infotainment system that talks to you, may still be under a factor warranty and provide reliable transportation from point A to point B at a discounted price.
However, the standard 20% rate of depreciation that was associated with new cars has been muted post-pandemic. With the price of used cars today growing at a steady pace, the price gap between used and new cars is narrowing. This has attracted more buyers toward new vehicles that come with a full factory warranty, are in much better condition, and boast all the latest bells and whistles. This makes the benefits of buying a new car three-fold.
2. Find Better Financing
Depending on your budget, it is possible to go for a new car since you get better financing options, both from lenders and dealerships. Other special offers may include 0% financing and cash backs that you wouldn’t get when opting for a pre-owned car. That said, a new car is going to be more expensive, and the high cost of monthly repayments might not fit well if you’re already on a shoestring budget.
3. The Used Car Allure
As of today, more than 8 million used cars have been sold in the United States. This enormous number is only possible because of the breadth of choice available in the used car space for the cash strapped. The single best argument for going with the low(er) price tag of a used car is the wide variety of options and the possibility of finding some not-so-old options while strolling through the lot at a used car dealership.
With around 20% of a car’s total value shaved off as soon as you drive it out of the showroom, you can still find a great deal of not-so-old vehicles. Furthermore, the addition of longer factory warranties given with newer cars means you get the same peace of mind buying a pre-owned car as you would a spanking new one. In short, going with a used car that’s not too old can get you the best of both worlds. To be on the safe side, it’s best to confirm the build-date of the used car you’re getting into before you sign on the dotted line.
4. Don’t Fall for the ‘Unbelievable’ Price
Whether you’re going for a used car or a new one (show-off!), don’t get easily swayed by an amazing price tag offered by used car dealerships. That’s because the car being advertised at an unbelievable price could just be a stripped-down version, with uppity air conditioning, or worse – manual transmission.
In short, a car that rolled off the production belt in 1999 is going to have different requirements in terms of maintenance as compared to one that was built in 2020. So don’t assume the killer price tag will get you a steal, reach out to the dealership for details, and don’t forget to read the fine print.
If you’re going with a new car learn more about what safety features to expect in the price point you’re comfortable in. Remember, a used car will usually require more tune-ups, as in, frequently having to change the oil filters and spark plugs as compared to a new car. On the other hand, trucks are different mainly because they come with tie rods and ball joints with grease fittings that may require frequent lube jobs.
5. Always have Plan
In the words of fellow Bostonian, Benjamin Franklin, “If you fail to plan, you are planning to fail.” This piece of wisdom is often imparted when you’re preparing for a big presentation at work or running the ‘Tor des Géants’ (go ahead, Google it!). On paper, it seems like a perfectly matched competition: your priorities vs. your self-discipline. But all too often, one’s hit with the realization that they’ve bought home a lemon instead.
Sure, you can waltz in a restaurant and find a good meal without knowing what you want to eat. You can even stroll in the mall just to window-shop and walk out the proud owner of a new blender. However, going to a car dealership is a whole different beast that can burn a hole through your pockets if you don’t have a plan.
In short, once you’ve decided to buy a car, you need to know – not guess if you want a new or a used vehicle. Going with a new or used option can make a big difference in terms of how much you can get for your current car, and how much will it cover the cost, as well as, how much you need to put down for the car, and how much you will be spending on those monthly repayments. Having a plan means you know exactly what type of vehicle you’re looking for, based on your needs and your budget, which instantly puts you ahead of most buyers.
Ending Note
If you can’t be bothered with finding the perfect car (new and used) or navigating through the various financing options (direct lending, dealership financing, et al.) why not hire the experts who can do all of the heavy lifting for you.
Founded in 2016, Inside Car Guys is a group of car dealership veterans and auto brokers in California who can jumpstart your knowledge of buying cars. The company works closely with all the major dealerships in Southern California from Los Angeles County to Orange County and Ventura, along with San Diego and the Inland Empire.
