Buying New Versus Used Vehicles
One of the biggest dilemmas car buyers face is buying new vs. used. Obviously there are pros and cons associated with each decision, but the advantages of buying used vehicles are growing. Here are some things to consider when you’re debating investing in new versus used.
What to Consider
A big factor that pushes buyers toward new over used vehicles is the draw of a warranty. New cars come with a long manufacturer’s warranty while many used vehicles are past their warranty period. This can feel like a safety net for buyers and alleviate their fears that they could end up paying hefty repair costs if something goes wrong with the car.
In the past, buying a used car was seen as risky as lots of problems could be hidden, but that’s no longer true. Companies such as Carfax and AutoCheck produce extensive vehicle history reports that help you avoid hidden issues. Unlike purchasing a new car where you’re relying on reviews of other similar cars, when you by used, you’ve got the facts on the actual car you’ll be driving off the lot. Additionally, while they vary among manufacturers, certified pre-owned programs insure that certified pre-owned cars meet manufacturer’s standards and often carry some form of warranty.
If you are a person who likes to have the latest model, consider the fact that most manufacturers don’t redesign models every year, so a three-year-old BMW looks pretty much like a brand new one, while your payment probably looks significantly lower. Another financial advantage of buying used over new is depreciation. The value of a new car drops by more than 20% over the first 12 months and then about 10% annually for the next four years. That means in 5 years your “new” car can be worth as little as 40% of its purchase price.
When purchasing a used luxury model, it will have already gone through this drastic depreciation phase and will probably be worth more as a trade in or if you decide to resell. Since today’s used cars are still running great for nearly double the 100,000 mile marker of the past, your investment will retain its worth far longer than its new counterpart.
While many new cars boast the latest technology, depending on how old it is, many used cars aren’t far behind. Used luxury cars will likely offer longer and more impressive equipment lists. For example with a used Mercedes or BMW, you will probably get park assist, power sunroof, automatic climate control, heated seats, leather and other features that don’t come standard with new compact or mid-size vehicles.