Buying a new car can be a stressful experience for many, and it takes a lot of time to decide what’s the best option for you. The most common dilemma is whether you should opt for a used car or go straight to the dealership and purchase a new one.
Both options have their own advantages and disadvantages, but the choice ultimately depends on your budget and preference.
While buying a new car often means that you won’t have to worry about unplanned expenses and breakdowns, the initial price is usually much higher. New cars depreciate much faster than used vehicles, so you should keep this in mind.
My detailed guide will help you decide which option is the best for you and guide you on which important factors you should take into consideration.
Advantages And Disadvantages of Buying Used Vs New
If you ask any financial counselor whether you should buy a new or a used car, chances are they’ll tell you that you should buy a used vehicle. The most common reasons they’ll give you are that used cars are cheaper to buy in the first place, they have lower insurance costs, and you won’t have to take the initial hit of depreciation.
While all of these reasons are valid, it’s not always the case that a used car is the better option, and it all depends on your budget and preferences. In fact, a used car can sometimes cost you more than buying the same model new, especially if you’re buying the car without a warranty.
Used cars can be a good way to go, but there are many advantages when buying a vehicle from the dealership – including the reassurance that the car is in top-notch condition and you have a warranty if anything goes wrong.
First and foremost, shopping for a new car is much easier and less time-consuming than shopping for a used car. You don’t have to spend hours, or even days, of your valuable time to evaluate the vehicle’s condition. New cars are in perfect condition, and you know their cost, so you don’t have to worry about overpaying it.
Initial Costs And Depreciation
Customers usually get more financing options when buying a new car. The interest rates are also better if you buy from a reputable dealership, and if you’re a good negotiator, you can get thousands of euros discount than the original sticker price.
The biggest disadvantage of buying a new car is the depreciation hit. The most notable depreciation occurs in the first two to three years after buying. We often hear that a car loses around 20% of its value as soon as it leaves the dealership and approximately 30% in the first year of ownership.
If you compare two seemingly identical cars, one new and one used, the used one will cost at least 20 to 30% less than the new one.
Don’t think that depreciation doesn’t hit used cars too, though. The car’s value drops as time passes, and the mileage increases, so even if you buy a used car, it still won’t be worth it the same when you want to sell it.
As the great Henry Ford once said, the best car is a new car. However, is driving a new car worth the extra few thousands of euros?
An Amortization Plan
You should always take your time and make a detailed amortization plan before you make your choice. It’s crucial to calculate the costs that will follow after you buy the car, and a detailed amortization plan will help you decide whether you should opt for a new car or buy a used one.
Dealerships usually offer a long-lasting warranty when buying a new car, and some of the Japanese carmakers even provide a 7-year warranty! What this means for your amortization plan is that you shouldn’t have any unexpected costs for your car’s maintenance in the next few years.
Although some dealerships and sellers offer a warranty for used cars as well, they usually last up to 6 months. When you consider all the expenses and work out your car’s amortization plan, you will have a clear picture of how much the new car will cost you when compared to a used car.
Should You Buy a New Or a Used Car?
Although both buying used and new have their own advantages and disadvantages, it all comes down to your personal preference. Some people can’t stand the idea of buying a used car, while others believe that buying a new car is a bad idea because of the depreciation hit.
You should first determine your priorities, write down an amortization plan, and do your research. Not all cars depreciate the same, as some lose their value faster than others.
If you decide to look for a used vehicle, my advice would always be to look for certified pre-owned vehicles. Purchasing your car through a certified pre-owned program will decrease the chances of buying a car with a severe problem, and it’s a compromise between the reliability and peace of mind of purchasing a new vehicle and the lower price of buying a used car.