Should I Buy a New Car or Used Car?

Young woman trying to decide if she should buy a new or used car.

New car vs. a used car? At first glance, a used car seems to be the sensible choice. But if that’s true, why do some 17 million Americans splurge on a new vehicle each year? They can’t all be reckless spendthrifts.

The simple answer is that everyone’s circumstances are different. For some people, a new car is the right choice. Others are better served by buying a used car. How do you decide? Let’s examine the new car vs. used car pros and cons.

In Praise of Used Cars

Here are four factors that might tilt you into buying a used car.

1. They cost less (you get in a vehicle for your money.) After three years, a new car is worth around 60% of what it costs brand new. Someone else takes that initial depreciation hit when you buy a used car.

2. Less sales tax. Simple math: if you pay less for the vehicle, you’ll also pay less tax.

3. Insurance costs will be less expensive. Value is just one of many factors, but if the car is ultimately worth less than a new one. It will usually reduce the premium you’ll pay.

4. More goodies. The new car buyer pays a steep premium for luxuries like leather seats and a sunroof, but when the car’s a few years old, they make little difference to the price. So if you want to indulge yourself with a high-end sound system or wood trim, you get better value buying a used car.

The Downsides of Buying a Used Car

With a used car, you don’t know its history. Perhaps it was babied and well taken care of, but maybe the first owner drove the vehicle like they stole it. A vehicle history report will reveal significant issues like floods or major accident damage.

However, you will also want a used vehicle inspected by an independent certified mechanic. The report will tell you if there is any physical damage that may have slipped through the cracks on a vehicle history report.

Second, older vehicles need more maintenance. Brake fluid, transmission flushes, and hose and belt replacements will come sooner than if you were to buy a new car. Even if you do the work yourself, you can’t avoid expenses like tires, shocks, and brakes.

The Joy of Buying a New Car

Although there is nothing like it, it’s not just about enjoying that new car smell. There are some sound reasons for buying a new car rather than buying a used one.

1. Warranty. Most new cars come with at least a three-year or 36,000 miles of bumper-to-bumper coverage, and there’s usually a powertrain warranty stretching out five years or longer from the purchase date. You’ll still need to keep up with oil changes and tire rotations, but those are included with many new car purchases anyway. You will also get to choose if you want to buy an extended auto warranty if you believe you will be keeping the vehicle for a more extended period.

2. Choice. When you buy new, you can get the exact color, trim, and equipment you want. There’s no need to compromise, which you usually have to do when buying a used car.

3. Condition. The new car is as clean inside and out as possible. You’re not sitting among the remains of someone else’s takeout, and there’s not a single scratch or chip on the vehicle anywhere.

4. Technology. New cars may offer Bluetooth for hands-free calling, Apple CarPlay, and Android Auto. If syncing your phone with your car is essential, you need a newer vehicle.

5. Safer. Newer cars meet more demanding crash test standards and get more safety technology. Stability control is standard, rearview cameras are on almost all new vehicles, and features like blind-spot detection and lane departure warning are popular choices.

6. Improved fuel efficiency. Manufacturers are squeezing more and more power from every gallon of gas, and new engines get better gas mileage.

New Car vs. Used Car Best Value for the Money?

How about meeting halfway if you’re still debating a new car vs. a used car? My advice to get the most value for your money is to look for a car one to three years old. It should still be in good condition, need minimal maintenance, and may have some or most of the factory warranty.

Best of all, you’ll save thousands while still getting many new car features and benefits. Remember to let someone else take the depreciation hit by enjoying a nearly new ride.

After you’ve decided on which type of vehicle to buy, take a look at either my “New Car Buying Tips” or “Used Car Buying Tips” for insider tips and secrets on how to buy a car and avoid dealer scams.

Shopping for a New or Used Car?

Before buying a new or used car, you must know what other people are paying for the vehicle in your local area.  Otherwise, you won’t know a reasonable price to pay for any car you’re looking to buy.

I highly recommend using an online referral service such as Ryde Shopper or Motor Trend.  Their quotes will automatically include any sales prices, discounts, or cash-back incentives currently available in the marketplace.

About the author
Carlton Wolf is the author and founder of Auto Cheat Sheet.My name is Carlton Wolf, and I’ve been in the car business since 1994, both retail and wholesale. I created the Auto Cheat Sheet to better educate buyers about the deceptive sales practices used by many dealerships throughout the country. Please understand that not all car dealers are dishonest. However, you never know who you’ll be dealing with, though. I’m willing to share my knowledge and experience with anyone who listens. Keep in mind that I’m a car guy, not a writer.