New or Used: The Age Old Auto Question

Buying new or used? It's an age-old question when it comes to buying a new auto and one most vehicle owners have pondered in the past. But with auto prices being so high right now and more cars retaining their value over time and not depreciating as quickly, deciding whether to invest in a brand new off-the-line motor or opt for a nearly new or used set of wheels has never been more complex.

Like anything in life, there are pros and cons on both sides of the coin, and while there are many amazing reasons to buy new, there are also some massive benefits of buying used.

Here are some essential factors that can help you to decide.

Buying New Cars

Buying a new car can be highly enticing as you will be able to customize it in any way that you want, and it will, of course, come with all the new tech automatically added to it. The type and amount of tech will depend on the car you choose and the price point you are willing to pay, but there is a certain level of flexibility built into buying a vehicle that is coming off the production line, as you can have some input into how it looks and what is included. Another benefit of having a brand-new auto is that it won’t likely have mechanical problems from the off. You will be the first and only driver until you hand it over, too.

However, there are also downsides to buying a brand-new vehicle. They are more expensive; typically, the average cost for a brand-new auto was around $40,000 in Q3 2023. New cars depreciate faster than their used counterparts; it is around 20% in the first year of ownership, which is $8,000 on the aforementioned $40,000 motor, and a massive 60% in the first 5 years. While you can opt to take out a loan to cover the cost of the new car, or you can lease it, you will have more finance options available for buying a new car, especially if you have a good credit score. However, it is still expensive, and you then have to make a lease payoff vs buyout decision, for example, if you decide to lease at the end of your term.

Used Autos

Compared to brand-new cars, used autos aren't as expensive, and you can find them at much better and varied price points than new versions as they won't be held at the same pricing standards. The dealers will set the price based on things like the car's condition, the current value, and the miles on the clock, for example. There is a high likelihood that you won't need to take out a loan or financing options as they are more affordable, which means you can save up and purchase one outright if you wish.

If you're buying used, you will also experience a lower rate of depreciation, as cars lose most of their value after the first 5 years and then more after the first 100,000 miles. So, in theory, you can buy a 5-year-old auto for 40% of its original value thanks to depreciation. Although not a hard and fast rule, it's an excellent place to determine fair pricing.

However, buying used cars can also come with some issues; most notably, the vehicles will already be subject to wear and tear and could require higher levels of repairs and upkeep as the original parts wear down and require replacing. Older cars come with fewer safety features (not always, but in some cases, this is true), and they won't always be equipped with the latest technology. On top of this, you might not always have the history of the car to know how well it's been cared for, if it's been serviced, and what work, if any it has done. There is the potential for a large amount of unknowns when buying a used motor that you need to consider when making your decision.

There is no right or wrong answer when it comes to buying new or used autos for your next purchase. However, there are some factors you need to stick to when buying, and you should ask yourself some important questions before committing to a purchase. How much can you afford upfront or as ongoing costs? How often will you use the vehicle, and what will you use it for? The more you understand why you need a car and what you can realistically afford, the better your decision and the less likely it will be to make the wrong one.