How do I: Decide to buy a new or a used car?
Who is affected: STARTING OUT, PARENTHOOD, BABY BOOMERS, RETIRED
DEGREE OF DIFFICULTY: EASY
What you'll need: YOUR THINKING CAP
What you need to knowTo some shoppers, buying a new car is the only way to go. New cars typically are reliable, carry an extensive manufacturer's warranty and come loaded with all the latest bells and whistles.
On the other hand, the moment you drive it off the lot, your new car loses 25 percent to 40 percent of its value. On top of that, comprehensive and theft insurance costs typically run higher for new cars than for used cars.
That's why other shoppers flock to used car lots. Used, or pre-owned cars, as many call them nowadays, are substantially cheaper than new cars. Buying a used car also protects you from the significant value depreciation that most new cars experience in the first few years. Insurance costs often are lower for used cars.
On the flipside, the older the car, the more repairs it needs. The costs and inconvenience of these repairs can add up over time. In addition, it's often difficult to ascertain a used car's maintenance and repair history.
New car vs. used car: Who wins?
Still on the fence? Our calculator can help you determine whether a new or used car suits your needs.
- Before you buy a car, decide what matters most to you: price, reliability, features, investment value, convenience or insurance costs. Rate the factors in importance, if necessary. Considering whether new or used is better for your specific needs should point you in the right direction.
- If you decide to buy used, be sure to read up about lemon laws.