Choosing between a new or used car can be challenging. New cars offer the latest features and warranties but come with a higher price tag and rapid depreciation. Used cars, while more affordable, may require more maintenance and come with a shorter warranty. Understanding the pros and cons of both options will help you make an informed decision based on your budget and needs.
Editor
Zarina S
Update 05.02.2025
When buying a car, one of the first decisions you must make is whether to go new or used. While used cars are more affordable, many factors must be considered. It’s weighing the benefits of a new car’s reliability and features versus the cost savings of a used one.
What to Consider When Buying a Car
Think about your monthly car payment. Can you comfortably afford it within your budget?
Check the interest rates for financing. Compare the rates for a new car loan versus a used car loan.
Factor in your car insurance premium. Financing may require more coverage than your state mandates.
Consider the maintenance and repair costs. Older cars typically require more upkeep, which could add to your expenses.
Reflect on the features you want. Are you looking for a new car with the latest technology and features, or is a basic, reliable used car enough for you?
Investigate the car’s safety record. Check crash test ratings and reliability.
Look into the car’s reputation. Research online reviews for durability and user satisfaction.
Buying a Used Car
Buying a used car takes more time than buying a new one. A big chunk of your time will go into finding a car in good condition with the features you need. That’s why the best time to buy a used car is when your current car is still running well, so you have time to browse different options without pressure.
Steps to Buying a Used Car
Set your budget. Determine your car payment and ideally, it should be under 10% of your monthly income. Factor in additional costs like maintenance, insurance, and repairs and save for unexpected repairs if the car is no longer under warranty.
Make a list of options. Identify the cars that meet your needs and budget. Popular models like the Honda CR-V or Toyota RAV4 are reliable but are pricier. For newer used cars, consider certified pre-owned (CPO) models which come with warranties.
Compare prices. Used car prices vary by location and seller. Private-party sales are the best deals, while CPO cars are more expensive due to the warranty. Use Edmunds to compare prices for your desired model.
Find used cars in your area. Use online platforms to filter cars by price, mileage, features, and location. Websites like Edmunds make it easy to search for cars that match your criteria.
Get the vehicle’s history. Always get a history report for used cars. This will reveal any accidents, salvage titles, or other issues. Sources like AutoCheck and Carfax provide these reports using the car’s VIN.
Contact the seller. Reach out to the seller to confirm details and ask about the car’s condition. If you’re dealing with a private seller, ask why they’re selling it and if there are any mechanical problems.
Test drive the car. Take the car for a test drive to assess its condition and handling. Pay attention to comfort, noise, and potential issues like squeaky brakes or a rough ride.
Have the car inspected. Before buying, get the car inspected by a mechanic especially if you’re buying from a private seller. A pre-purchase inspection can uncover hidden issues and cost $100-$200.
Negotiate the price. Start by offering a price below the asking price based on your research. Be reasonable and back it up with facts.
Finalize the papers. Make sure all papers are in order. Confirm everything, from signing the contract to transferring the title, is done correctly. Arrange insurance before driving the car away.
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Buying a New Car
Buying a new car is exciting and doesn’t have to be overwhelming. You can research, locate, price, and negotiate all from your phone, making it easier than ever to shop for a car during daily moments. However, timing your purchase can be tricky in the current market. You can wait for conditions to improve and keep your current car or buy now to maximize your trade-in value.
Steps to Buying a New Car
Set your budget. Determine your car budget and ideally keep monthly payments under 15% of your income. Don’t forget taxes, registration, and insurance costs. Aim for a 10% down payment for more predictable expenses.
Pick the right model. Choose the type of car that fits your needs - sedan, SUV, or luxury. Consider fuel efficiency, safety features, and brand reputation.
Research pricing and offers. Look for rebates, dealer incentives, and financing offers. Use tools to compare prices at different dealerships.
Check dealership inventory. Visit dealerships to see if they have the car with your desired color and features. Inventory may be limited so consider ordering the car or expanding your search.
Get pre-approved. Get preapproved for a loan to set your budget and help with negotiations. Compare offers from banks, credit unions, and online lenders for the best rates.
Negotiate the price. Contact several dealerships for price quotes including taxes and fees. Use this info to negotiate a better deal or ask for perks like free maintenance for a year.
Compare financing. Compare dealership financing to your preapproved loan. Dealerships sometimes offer better rates or added warranties.
Test drive the car. Schedule a test drive to check the car’s features and performance. Ensure it meets your expectations.
Finalize the deal. Once you agree on the price and financing, review the contract carefully before signing. Make sure all charges and features are listed clearly.
Buying New Cars Pros and Cons
Pros
New cars offer the latest technology and safety features like adaptive cruise control and advanced infotainment systems.
They come with comprehensive warranties, typically covering repairs for 3 years or 36,000 miles, and up to 5 years for powertrain coverage.
Financing is often more favorable, with options like 0% interest or cash-back deals.
You can fully customize a new car, from color to tech package.
New cars are more reliable, needing minimal maintenance in the first few years with warranty coverage for most repairs.
Cons
New cars have a higher upfront cost, making them less budget-friendly.
Sales tax on new cars is higher, adding significant extra cost to the purchase price.
New cars depreciate quickly, losing significant value in the first year, which can affect resale value.
Insurance is more expensive due to the car’s value and lender requirements for full coverage.
After the warranty ends, new cars can be costly to maintain due to advanced technology and specialized parts.
Buying Used Cars Pros and Cons
Pros
Used cars are more affordable than new ones, offering lower monthly payments and shorter loan terms.
They depreciate more slowly, allowing you to retain more value over time.
Buying used gives you more choices, including higher-end or larger models, and Certified Pre-Owned (CPO) cars with warranties and inspections.
Insurance premiums are lower for used cars due to their lower cost and coverage needs.
CPO cars offer new-car benefits at a lower price.
Cons
Used cars may have hidden issues, even with a vehicle history report, and you’re responsible for repairs once you own it.
They often come with limited or no warranty, leading to potential out-of-pocket repair costs. Extended warranties are available but can be expensive.
Financing for used cars typically has higher interest rates, increasing the total loan cost.
Older used cars may require more maintenance and repairs, especially if not well-maintained by the previous owner, which can offset initial savings.
Used cars may lack the latest technology and safety features found in newer models, which can be a downside if you want upgraded systems.
Should You Buy a New or Used Car?
Ultimately, it depends on your priorities. If cost is key, a used car may be best for you. However, if you value the latest tech, warranty, and peace of mind, a new car could be worth the extra cost. Consider your finances and preferences when deciding.
Budget. If you have a limited budget, then a used car is the more affordable option. But remember the true cost of car ownership isn’t just the purchase price - maintenance, insurance premiums, taxes, and fuel all add up.
Vehicle needs. Think about what you need from your vehicle. If you need specific features like advanced safety technology or the latest infotainment systems, then a new car might be the way to go. If you need a reliable vehicle that gets you from point A to point B without the need for cutting-edge features, then a used car would be fine.
Long-term financials. When buying a new car consider the depreciation factor as new cars lose their value quickly - up to 20% in the first year. Used cars tend to depreciate more slowly, so you retain more of your investment over time.
Leasing. Leasing a new car is another option if you prefer lower monthly payments and don’t mind not owning the vehicle at the end of the term.
Certified Pre-Owned vehicles. If you want the best of both worlds then consider buying a Certified Pre-Owned car. CPO cars offer the reliability of a newer car with added warranties and benefits like roadside assistance but at a lower price than buying a new one.
Should I Buy a New Car or a Used Luxury Car?
When deciding between a new non-luxury car and a used luxury car consider your budget and priorities. A new car will be in perfect condition with low mileage and a full warranty. But new cars depreciate quickly and for that price, you may not get the level of luxury you want. A used luxury car allows you to own a more powerful and stylish vehicle for a lower price. The bulk of depreciation has already been absorbed by the first owner so it will hold its value better. However, buying a used luxury car comes with the drawbacks of limited warranty coverage, higher potential repair and maintenance costs, and more expensive parts and services. Older technology and higher operating costs may also be a concern.
Auto Loan Averages
Monthly payment. New cars - $734. Used cars - $525.
Loan amount. New cars - $40,927. Used cars - $26,248.
Interest rate. New cars - 6.84%. Used cars - 12.01%.
Loan term. New cars - 68.48 months. Used cars - 67.41 months.
Credit score. New cars - 753. Used cars - 689.
Source: Experian data as of Q2 2024
Conclusion
Choosing between a new or used car depends on your budget and priorities. A new car offers the latest features, full warranties, and minimal immediate maintenance but comes with a higher cost and rapid depreciation. A used car is more affordable, depreciates slower, and has lower insurance but may require more maintenance and lack modern features. Certified Pre-Owned cars balance the benefits of new cars with lower prices. Evaluate your budget, lifestyle, and long-term goals to make the best decision.
blog.title.faq
How long does it take to buy a car?
The car buying process can take anywhere from a few days to weeks depending on how specific you are about the car and if you’re financing or trading in a vehicle. Finding the right car might take a day or up to a few weeks. Once you’ve chosen a car the dealership process usually takes a few hours to complete paperwork and sign contracts.
To speed things up get pre-approved for a loan and gather necessary documents in advance. If you’re trading in a car handle the appraisal beforehand. After familiarizing yourself with the process you could buy a car in one day. Buying from direct-to-consumer brands like Tesla or Rivian is faster since the process is handled online.
Should I buy a new car from this year or last year?
When choosing between the latest model or an outgoing model, it depends on what you prioritize. New models often feature updated technology, better styling, and improved features but come at a higher price and might have some initial reliability issues. Last year’s models can be significantly cheaper due to discounts and often offer greater reliability since many of their issues have already been addressed. However, the selection of these models might be limited, and they tend to depreciate faster than the new models.
In the end, it depends if you want the latest tech and design or a more affordable, proven option. Test-driving both models and comparing prices will help you make a more informed decision.
What used cars should I avoid?
When buying a used car, avoid those with salvage titles, over 200,000 miles, or any inconsistencies on the odometer. Also, avoid cars with no maintenance records. A vehicle history report will help you uncover these issues. Generally look for cars with fewer miles, around 12,000 miles per year. But don’t be fooled by low mileage alone; a well-maintained car with higher miles may be a better choice than one with fewer miles but a questionable maintenance history. Always research the model before buying.
