New vs. Used Cars: Which Is the Better Deal Now?
While few things are as thrilling as buying a new car, used vehicles can save you thousands of dollars upfront. Making the decision between buying a new car or vs a used car comes down to a number of factors, the most important being your budget, of course. Before you head to the new or used car lot, take the time to see all the numbers.
Buying New vs. Used Car
Even if you’ve dutifully scrimped and saved up to make a sizable down payment on a new car, it may not be the best way to spend money. Let’s say you’ve saved enough to buy a new car with cash; you’re still tossing away money.
Related: Dealer vs. Mechanic: Who Should Work On Your Car?
New Car Depreciation
Blame depreciation. Depending on the make and model, the average new car’s value depreciates by as much as 11% the second it rolls off the car lot! Within the first year, a new car’s value decreases by roughly 30%.
That means a $30,000 car, on average, is worth about $9,000 less within a year. Sell the car in three years, and it will have depreciated by about $15,000, or lose 50% of its purchase value!
Used Car Depreciation
It’s worth pointing out that used cars also depreciate in value, but you’re starting at a lower price when you buy it.
Let’s say you buy a used three-year-old car for $15,000. You’ve immediately saved $15,000, but you’ll also lose less to depreciation if you sell it in another three years when it’s worth about $10,000.
Both new and used cars need maintenance; you’ll need to:
Have it tuned up every year
Change the oil and air filters
Make other repairs as needed
For cars under ten years old and under 120,000 miles, depreciation is the biggest factor in price and value!
Why Buy Used vs. New Car
Used cars have plenty of advantages over new ones beyond depreciation. Here are a few more reasons to buy used:
Lower insurance: Vehicles worth less will cost less to insure, especially if you have collision or comprehensive coverage. If a vehicle is worth less than $10,000, you may even consider dropping collision and comprehensive coverage plans to save even more per year.
Bang for your buck: You can get a lot more car for your money when you buy used! Dreaming of a BMW, an Audi or another nice car? Buy a model that’s a few years old and you can save tens of thousands of dollars while still getting the car you want.
Renewals: All cars need to register with the state and used cars cost less!
Why Buy New vs Used Car
Some buyers are okay with spending a bit more to get exactly what they want, especially when buying a new car comes with a bit of peace of mind.
Warranties and service plans: Most manufacturers offer maintenance and service plans that are free for a period of time and then at a reduced rate. Most brands offer a factory warranty for about 36,000 miles or three years. Make sure you get the details on any warranties.
Better financing: Manufacturers and other financing institutions typically offer lower interest rates on new car loans. Watch for seasonal manufacturer rebates or incentives that aren’t usually available on user cars.
Keep Any Car on the Road
Garfield Auto has helped Traverse City families stay on the move for more than 40 years. Whether you’re looking at a new vs. used car or have already made a purchase, trust our experienced technicians to provide expert automobile maintenance and repairs at a fair price. Schedule your appointment today and we’ll see you at the shop!