Whether you’re buying your first car or you want to trade in your current vehicle, one important decision you’ll need to make is whether you want to buy used or new. Because used vehicles tend to be the more budget-friendly option, they’re often a popular choice. But there also advantages of buying a new car, even if it means lowering your car budget a bit so that a brand new car is a viable option. When weighing your options, consider some of the following:
Down payment or trade-in
If you’re financing your car, whether it’s used or new, you’ll usually need some sort of down payment or a vehicle to trade in. Some financing offers include very low or even no required down payment, but putting money down can potentially lower your interest rate and will also lower your monthly car payments. The loan amount you qualify for might help to make your decision much easier, and if you aren’t offered the financing you need to buy a new car, you may need to consider a cheaper model or a used vehicle—especially if you aren’t putting any money down.
Another thing to consider is dealership incentives. If you finance a new car purchase through the dealership, there could be some perks, such as lower financing rates, cash incentives, rebates, and more. However, when these incentives are offered, they are usually offered for brand new car purchases.
As time passes, just about any car will lose its value, or depreciate in value. And depreciation begins the moment that the car is driven off the lot. In fact, with a new car, approximately 20 to 30 percent of its value is automatically lost as soon as you drive away in it for the first time. The effects of depreciation on a used car, however, are not felt nearly as much.
Car maintenance and repairs
When you have a brand new vehicle, you’ll rarely need anything major done, aside from regularly scheduled maintenance. If anything does happen with a brand new vehicle, you’ll have protection under the car’s warranty, so you won’t have to worry about the costs. A new car warranty will be in effect until you hit a certain number of miles, or after a certain amount of time has passed—whichever comes first. If your vehicle needs anything extensive done and you’ll be without a car while it’s being fixed, the dealership will usually offer you a complimentary loaner to use in the meantime. For many people, this convenience and protection is enough to buy a new car.
Although buying a used car can save you money initially, you have to consider the cost of repairs if you’re opting for an older car with a lot of mileage. In the end, you might end up paying the same amount of money, or perhaps even more. You have to consider the money that might need to go into the car over the years, and also the time investment that could be required. Purchasing a used car is one thing, but you’ll want to ensure it’s reliable. Otherwise, you might not have a way to get to and from work if your car suddenly breaks down.
One popular option to consider, which can be a good compromise between the two, is a certified pre-owned car. These vehicles are gently used and sold through dealerships, and offer the same warranty that you’d receive by purchasing a brand new car. Buying a used model can also sometimes mean lower car insurance premiums, which can help you to save even more.
If you still can’t decide between a used or new car, begin looking at your possible options and compare prices from various dealerships before you make a final decision. Buying a car is a huge decision, and it’s not one that should be rushed.
Would you like to buy a car, but could use some extra cash? If you’re receiving structured settlement annuity payments, Peachtree Financial Solutions may be able to help. Contact Peachtree Financial Solutions today to learn more about selling future payments for a lump sum of cash.
Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.