New Car Vs. Used Car - A Comparison on Costs

Buying a new vehicle is not just about the make and model; it's also about deciding whether to go for a used or new car. While purchasing a shiny brand new car may be enticing, going for a used one can help you save a tremendous amount of money. To help you out with your decision, let's compare both new and used cars and what are the financial advantages and disadvantages you may get from both.

Advantages of a New Car

Warranty - All new cars come with a warranty, which will save you from repair costs for a few years. That way, you'd be able to save money and focus only on car maintenance.

Lower Interest Rate - When you need financing, buying a new car is more advantageous. Most dealerships offer an array of financing methods with lower interest rates. Thus, you can save a lot of money from the interest rate you're going to pay for the rest of the loan's life.

Better Car Technology - New cars come with better features and technology. With the tech-driven world, we live in today, car tech and features upgrade almost every year. We now have hybrid cars and a few electric cars that come with lower emissions and improved gas mileage. New cars also have better infotainment and connectivity features.

Disadvantages of a New Car

Higher Depreciation Value - New cars have higher depreciation value. Depreciation is the term that defines the rate of how much the vehicle loses its value over time. The most common belief on depreciation is that new cars lose 20% of its value the moment you drive it home. In the financial side of things, this is not ideal. In just two to three years, you're burning thousands of dollars you won't be able to get back.

Getting a New Model - You need to be cautious when buying a new model. Carmakers tend to come up with upgrades every few years. Changes such as exterior design alteration and engine change are frequent for new models. Keeping up with the updates is not just pricey but also time-consuming.

Advantages of a Used Car

Lower Depreciation Value - By buying a used car, you're avoiding the higher depreciation hit. If a new car has a 20% depreciation rate the second you take it out of the dealership, it's believed that a used car only has around 5% to 7% depreciation value. That's a massive amount of savings on your end. So if, after three years, you're going to sell your used car you bought for $15,000, your vehicle can have a $10,000 price tag.

Less Time to Save - Since used cars are more affordable, it won't take a long time for you to save up. You can even pay a used car in cash.

Lower Insurance Rates - This advantage apply to specific car models, but it's worth knowing, especially if you're still in your twenties. Insurance rates are usually higher due to age, so getting a used car as a young adult can help you with your savings.

Disadvantages of a Used Car

Repair Costs - Since used cars don't come with a warranty, you need to set aside money for future car repairs on top of the car maintenance. Luckily, modern car technology helps in avoiding frequent repairs. Still, you have to save up a little more in case of emergency repairs, among other things.

Fewer Aesthetics Choice - Unless you want to invest in, say, changing the color of the car, you don't have much of a choice when it comes to the used car's appearance. It is what it is, and you're getting what you're willing to pay. This can be time-consuming as looking for your perfect car with your desired look might take a long while.

When it comes to what will cost you, it's necessary to know that car depreciation is the deal-breaker. If you’re living in Utah and nearby states, avoid depreciation by visiting a Utah used car dealer that sells pre-inspected used cars and offers financing options.