Like any major purchase, buying a new vs a used car carries its fair share of disadvantages. The biggest drawback of purchasing a brand-new vehicle is the cost. Used cars are priced less because, over time, cars lose their value. Things like accidents, high mileage and excess wear-and-tear can knock the price of a used car down.
Additionally, you’ll likely pay more at the dealership in service fees when you purchase a new vehicle. And, if you’re like most Americans, you will either finance or lease your vehicle because you don’t have the funds to purchase it outright. That means you should compare interest rates for new vs used cars to find the best deal.
New cars cost more than used cars. If cost is a major factor for you, it can be tricky finding a new car that falls within your price range. If you are considering a loan to pay for the car, your monthly payments will be higher, so make sure to use a calculator and estimate if the amount suits your budget.
Additionally, sales taxes are higher, so be sure to consider this when you estimate the cost. Insurance can also be much higher, especially because of the comprehensive and collision coverage lenders generally request. For this reason, it’s always a good idea to check with your insurer before making a purchase.
Even if you do find a new car that works with your budget, it may not be the style, make or model you are looking for. You may only be able to afford a smaller or less luxurious model by opting for a new car.
It may take you more time to buy a new car, too. From shopping around at various dealerships to undergoing loan approval processes, it can be exhausting. You may have an easier time finding a used car that fits your preferences due to the sheer volume of used vehicles that exist.
Perhaps the biggest drawback of purchasing a new car is depreciation. New cars lose as much as 20% of their value as soon as they leave the dealership. That means you will be paying more than what it’s worth! The longer you own the car, the less it is worth. If you plan on selling your car in the future, you may want to consider a used car instead.
Continue reading to learn the benefits and drawbacks of buying a used car.