Should You Buy a New or Used Car?
- April 20, 2020
- 4 min read
What we'll cover
Whether a new or used vehicle makes the most sense for your needs
The pros and cons of used and new vehicles
Ally's personal vehicle financing options
You’ve phoned a friend. Polled your parents. Taken an online quiz and spent hours researching online. But you still can’t answer one seemingly simple question: Should I buy a new or used car?
Of course, you’d love to slide in behind the wheel of a brand-new car. But when you’re trying to be budget conscious, a used vehicle may be the way to go. Yet a recent Ally survey revealed several misconceptions that you should consider, including cost and the age of an average used vehicle.
As your ally, we’re here to break down the pros and cons of each option so you can answer that all-important question — and drive off behind the wheel of a car that’s right for you.
What are the advantages of buying a new car?
In addition to that new-car smell (who doesn’t like that?), a new vehicle can be equipped with the latest safety, technology, and infotainment features. These lane-keeping sensors, automatic braking capabilities, dashboard touchscreens, and more can help you avoid accidents and keep you comfortable, whether making a cross-country road trip or on your daily commute to work.
New cars also often get better gas mileage and produce fewer emissions. Plus, since they’ve recently rolled off the assembly line, there’s a lower chance of a part breaking or something malfunctioning.
On the off-chance something does go wrong, a new car is protected by a manufacturer’s warranty, which should cover the cost of any necessary maintenance, repairs, or replacements within a certain time frame (usually up to 3 years or 36,000 miles, whichever comes first).
What are the disadvantages of buying a new car?
Those latest gadgets and gizmos? They come with a price. You’ll pay a premium to be the owner of a brand new car. According to Kelley Blue Book, the average new vehicle costs more than $37,000. In contrast, the average price of a used car is around $20,000 (although a recent Ally survey revealed that consumers believe the average price is less than that, around $9,800 ).
Be a savvy shopper, though, and you can find a new car that fits within your budget. Car prices fluctuate throughout the year and may be negotiable (especially if you’re a shrewd bargainer), so it’s important to keep a watchful eye on the vehicle of your dreams.
Rule of thumb says the best time to buy a new car is at year-end sales events, the end of the month, during model changeovers, and during holiday sales events. Our personal vehicle financing can provide options and terms to suit different budgets.
A new car may also be more expensive to insure if additional coverage is needed, like comprehensive or collision coverage, or even gap insurance.
Take note: The value of a new car can drop by more than 20% after the first 12 months of ownership, and 10% annually for the following four years. So, if you think you might sell your wheels soon after buying them, they will be worth less than what you initially paid.
What are the advantages of buying a used car?
Hands down, the biggest advantage of buying a used car is its more affordable price tag. While more expensive than you may think, the average price of a used car is about half the average cost of a new one. This means you could have a cheaper monthly payment and the total amount of finance charges you’ll pay over the lifetime of your contract may be less, too.
Another huge advantage? You can buy a used car with confidence thanks to certified pre- owned vehicles. This credential gives car buyers peace of mind that the car has been inspected and is up to the manufacturer’s standards.
And when comparing similar models, a used vehicle may be more inexpensive, which might allow you to get a better vehicle than if you purchased a brand new set of wheels. For example, you might be able to snag the fully accessorized, luxury model of a particular SUV if it’s used, but only be able to afford the base model if its new.
What are the disadvantages of buying a used car?
The biggest disadvantage of buying a used car is that you may not get a complete picture of its maintenance and repair history. Thankfully, many dealers will provide a vehicle history report for free. Be sure to ask for one, and the minimal cost is worth the investment if the seller doesn’t include it.
But vehicle reliability is improving across the board—for new and used vehicles, so don’t think you’re destined to a future of expensive fixes if you purchase a used car. Since many preowned vehicles are no longer covered by the manufacturer’s warranty, you can help protect yourself from potential repair costs by purchasing a vehicle service contract.
Lastly, when buying a preowned vehicle, you might have to compromise on features — or even the make and model. Used car shopping requires flexibility and patience because your choices are limited to what’s available in the existing inventory. (If you’re purchasing a new car and what you want isn’t available, you can always place a custom order.)
“New or used?” might always be a question that’s difficult to answer. And that’s okay. But hopefully after you’ve considered all the pros and cons of each option, you’ll have the confidence to make a purchasing decision that’s right for you.
June 8, 2022 • 5 min read
April 26, 2022 • 4 min read
Nov. 24, 2021 • 4 min read
Inspiring stories, the latest financial discussions and helpful information to build your best possible future.