New cars vs. used cars

This comparison can help you decide if a new or used car is best for you.

A close-up of a dashboard and steering wheel of a vintage car.

New cars vs. used cars

New cars: advantages and disadvantages Used cars: advantages and disadvantages
Disadvantage: higher price
The purchase price of a car is higher when the car is new.
Advantage: lower price
Used cars have a lower purchase price and can be a much better value overall. If you purchase from a private seller with no dealer in the transaction, you’ll probably get a better price — but if the deal turns out to be a bad one, the seller usually will not allow you to return it.
Disadvantage: instant depreciation
Depreciation is when the value of a car goes down due to wear and tear over time. Almost all cars depreciate. A new car depreciates the minute you buy it — 15% or more. The value can drop hundreds or even thousands of dollars the day you drive it off the car dealer’s lot.
Advantage: declining depreciation
Used cars continue to depreciate, but cars typically depreciate the most during the first 3 years.
Disadvantage: higher insurance, tax & fees
Insurance, taxes, and registration fees for a car are higher when the car is new. Used cars are generally less expensive to insure.
Disadvantage: higher loan interest rate?
A loan for a used car may carry a higher interest rate than for a new car. Also, cars more than seven years old might not qualify for financing.
Advantage: warranty
New cars typically come with a comprehensive warranty that covers the cost of repairs and labor for up to 3 to 4 years or 36,000 to 48,000 miles, whichever comes first.
Disadvantage: limited or no warranty
If you purchase from a private seller, your car may not carry a warranty. A dealer may or may not offer you a warranty on a used car.
Advantage: latest features & options
With a new car you can often have the flexibility to order a car with the features and options you want.
Advantage or disadvantage: fewer feature choices
You can’t “order” a used car with the features and options you want, and waiting for the perfect match could take months. But with a used car you may get more features for the money.
Advantage: top condition
A new car should have no previous wear, mechanical problems, or body damage.
Disadvantage: higher maintenanceUsed cars may have higher maintenance costs. To reduce this risk, before buying a used car:

  • Thoroughly review all maintenance documentation.
  • Inspect the car during daylight hours.
  • Test drive in highway conditions.
  • Consult a service such as Carfax to determine if the car has been in an accident or otherwise damaged.
  • Have a mechanic inspect the car before you pay.

Note: A good middle ground between new and used is a “certified pre-owned” car. These have been checked out by a dealer and come with a warranty.

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