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New or Used?
There are advantages to both. When trying to decide which makes sense, it usually comes down to a simple question: How much money do you have to spend?
The average used car costs less than half the average new car -- that's probably why used cars outsell new cars three to one. You will also enjoy the benefit of paying less to insure a used car. But remember that while it may cost substantially less to buy a used car, it will undoubtedly cost more to maintain it.
Pros and Cons
| New | Used | |
| Pros | Lower interest rates Long-term financing Full factory warranties Lemon law protection Usually safer than used Customizable from the factory |
Cost less Original owner absorbs the loss through depreciation Can often find great deals on similar cars if you have the time to shop around Can save on sales tax, if bought privately Lower registration fees |
| Cons | Costs more Lose substantial money through depreciation as soon as it's driven off the lot |
Warranties not as strong, if they exist at all Not as dependable Financing rates higher More challenging to find a good used car than a good new one |
So What to Do?
If you want to save money by beating the big depreciation loss, then look to buy a car that's at least two years old. That's because the wholesale value of the car will drop the fastest during this period-as much as 70% of retail value.
New cars make sense if you plan to keep it through the length of the loan and can benefit from owning a well-cared for car without having monthly payments. There is also the undeniable simple pleasure of driving a brand new car. If you can afford it, there's really no reason not to buy new.