The allure of a new vehicle can be powerful, but three times as many used vehicles as new cars are sold each year in this country. Your budget and mind-set — some people just can’t stand the idea of buying someone else’s trouble — may determine which is right for you. If you’re on the fence, here’s a breakdown of benefits and drawbacks.
New-car benefits and drawbacks
| Benefits |
Drawbacks |
- It comes with a comprehensive manufacturer’s warranty of at least three years or 36,000 miles that will cover almost any eventuality. Some go to 10 years or 100,000 miles.
- It will likely have the latest safety, comfort and convenience features available.
- There are no surprises. You are the first owner, and there are no doubts about previous mechanical problems or accidents.
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- It will cost significantly more than a three-year-old used car.
- Comprehensive and theft insurance costs could be significantly higher than buying used, although insurers offer discounts for new safety features.
- It will lose 25 percent to 40 percent of its value the moment you buy it, likely locking you in to long-term ownership.
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Used-car benefits and drawbacks
| Benefits |
Drawbacks |
- Significantly cheaper than a new car.
- Comprehensive and theft insurance costs are likely to be less.
- The rate of depreciation over time will be less than the first two years of ownership of a new car.
- A buyer may be able to step up to a luxury model for the same price as a new plain-Jane version.
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- Questionable maintenance and repair history.
- Comprehensive and theft insurance costs could be significantly lower, although you might miss out on insurer discounts for new safety features.
- No comprehensive new-car warranty, though used-car warranties often are available at extra cost.
- Higher maintenance costs as the miles on the vehicle climb toward 100,000.
- Not as many safety and convenience features as a new vehicle.
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