New car. Used car. How do you decide which to purchase when you’re ready to replace your current vehicle?
And while it may seem easy to answer – obviously, a new car is better, right? – the correct response is an unequivocal, “It depends.”
The Q&A are even more important when you consider that the average new vehicle currently costs around $32,000, while the average used car price is about half that.
For various reasons, including cost, about twice as many Americans buy used vs. new car each year.
“When making the new vs. used car decision, each of us must examine our unique set of financial and life requirements,” says AutoTrader.com in “4 Questions to Help You Decide on a New or Used Car” posted online. “A little introspection is good for the soul and the wallet.”
If you’re examining only costs – as Edmunds.com does in the article “Comparing Car Costs: Buy New, Buy Used or Lease” – the choice appears to be a no-brainer (used).
But there are a number of other factors you may want to consider when trying to decide.
Some of the main advantages of buying a new vs. used car are:
- You probably can get the vehicle the way you want it.
- The best warranty comes with a new car from the manufacturer.
- Your new vehicle will have more up-to-date technology – and we’re not just talking nav system.
- It will be equipped with the latest (often government-mandated) safety features.
- Fuel efficiency may be greater on a newer model of the same vehicle.
- Less maintenance will be required because, well, it’s new!
The advantages of purchasing a used vs. new car are:
- Price (see above) or getting more vehicle for the same amount of money as a new vehicle.
- Total cost to own the vehicle comprising all out-of-pocket costs is likely to be lower.
- Certified pre-owned vehicles – a growing category of used cars – provide the buyer some warranty protection, so there’s less risk of buying someone else’s problem.
- You can escape the biggest depreciation hit, which comes in the first three years of ownership.
- Insurance rates may be lower, especially if you do your research.
A good place to compare new vs. used car prices is U.S. News & World Report’s Best Cars rankings, which covers multiple categories from small cars to full-size trucks and luxury SUVs.
If you decide to purchase a used vehicle, be sure to look at Kelley Blue Book’s Best Resale Value Awards at kbb.com. The website provides Kelley’s selection of best brands, overall top 10 models and winners of about 20 categories (depending on the year) from 2011-2015.
Kelley says post-award audits have demonstrated projections of resale value are “extremely accurate” in estimating the future values of new vehicles.
Then, whether you purchase new or used, you can be reasonably certain you made the right choice.