Buying New vs. Used Cars
Compare the benefits of buying a new or used car to make the right choice for your situation
Thinking about buying your first car? Whether you have been leasing a car for the last few years or you've just graduated and are ready to strike out on your own, you may be contemplating whether to buy a new or used car. There are advantages to both options, but it's important to choose what's best for your budget and lifestyle. Many young professionals choose to buy a used car as it is often more affordable, and as such we have focused not only on the benefits but also specific considerations when buying a used car. Comparing the benefits of new vs. used cars ahead of time can help you save money and be more confident in your purchase.
Cost-saving benefits of buying a used car
There are many benefits to buying a used car, especially when you consider the cost savings. It's possible to save up to 40 percent by purchasing a used car that is three years old instead of a brand new car. Plus, new cars can lose up to 50 percent of their value in just three years. Used cars also depreciate in value, of course, but the decline is slower than with new cars.
Used cars can also help you save through reduced insurance rates, which are often lower on used cars than they are on new vehicles. However, this can depend on a number of factors - including the make, model and age of your car, as well as where you live - plus, some new models have better rates due to their safety features. Still, it's worthwhile to talk with your insurance agent to see if you would be eligible for discounts or other benefits before making your purchase.
What to know before buying a used car
With any used car, you'll want to make sure you know the history of the vehicle. Has it been in any accidents, where was it driven previously, and what is the Kelley Blue Book value for the make, model and mileage? This tool can help you comparison shop when you're deciding what type of car to buy, what model year to choose and whether to buy new or used. Using Kelley Blue Book alongside a vehicle history report site, you'll be able to research a car thoroughly before you make an offer. It will confirm that a used car has been inspected properly and has registration and title information, among other documents. So whether you're wondering how much you should expect to pay, or if a car may have issues the seller isn't mentioning, it's important to do your research.
Benefits of buying a used car from a dealership
Buying a used car from a local dealer has several benefits, including a wider selection, extended warranties, auto financing, and certified pre-owned vehicles, which are used cars that go through a multi-point inspection process. If the vehicle passes the inspection, it will also receive a new warranty. Dealers may also have seasonal sales you can take advantage of.
If you do plan on buying a used car from an individual seller, it's a good idea to take the vehicle to your mechanic and have them perform an inspection to check for rust damage, worn parts and other potential issues before making an offer. The mechanic may charge a fee for this service, but it could end up saving you thousands of dollars if the car needs major repairs or has underlying issues.
Buying a new car could mean less maintenance and more features - making it worth the price
If you think that buying a new car is out of your price range, you may want to think again. If you have good credit, it may be easier than you think to purchase a new vehicle. Plus, some manufacturers also offer discounts and incentives when you buy new. Your dealer will know the specifics about such offers, so be sure to ask about them. Other advantages of buying a new car can include:
- Access to the latest design options, technologies and safety features, including better fuel efficiency.
- Greater variety in the color and enhanced features available for your chosen make and model.
- The option to purchase luxury vehicles as soon as they enter the market and special-order additional enhancements.
- Less-frequent maintenance and repairs to brand new parts for the first few years.
- Warranties on new cars that can last longer than those for used cars.
- Legal protection against "lemons," i.e., new cars that fail to meet quality or performance standards.
- Roadside assistance packages that are offered as part of a warranty on most new vehicles.
Different dealers and manufacturers may have additional incentives or offers that differ from the ones listed above. While the advantages we named likely apply in most areas, it's important to check with your dealer about specifics before buying a new car.
Open a checking account online to plan for your purchase or payments
Whether you're buying a new or used car, you'll want a checking account you can rely on for secure online banking and bill payment options. When you open a checking account online at Citizens Bank, you'll be able to pay bills online, monitor your account balance and transfer money at home and on the go. Once you're ready to buy a car, contact a Citizens Bank customer service representative to learn how our online banking options can make it easy to set up automatic payments after you make your new or used car purchase.