Should I Buy a New or Used Car Which Is Better

Should I Buy a New or Used Car: Which Is Better?

There are numerous choices for consumers when it comes to buying a new car. It is not simply about picking a model and brand of the car but the bigger question is whether you want to buy a new car or a used car. This is a very important decision and will make a huge difference to your finances. You need to determine the purpose of purchase and also consider whether you qualify for a loan or not. Loans for new car and used car are available at varying terms and interest rates. An insight into the difference between the two loans will help you choose the one that is perfect for your needs.

Buying a New Car:

Buying a new car has a certain appeal to it, but that’s not the only perk. Whether you’re looking for the latest style, extended warranties or the most up-to-date safety features, a new car may be something you’re interested in. Here are the big perks of buying a new car:

Advantages of buying new Car:

• As close to perfect as a vehicle gets in terms of condition
• New-car warranty, plus many automakers include free roadside assistance, connected services, and maintenance programs for a limited time
• Wide variety in terms of color, interior materials, and features
• Generally lower loan financing rates
• Equipped with the latest safety and technology
• No repair bills during the warranty period, and in some cases, no maintenance bills for the first couple of years.
• You can get a loan for about 90% of the cost of the car and the interest on the same will be low. Many banks provide loans on the ‘on road’ cost which reduces your burden.

Disadvantages of Buying a New Car:

• Depreciation. A new car will begin to lose its value the second you purchase it and drive it off the lot. This depreciation will continue at a pretty high rate during the first few years of ownership. Because of this, the resale or trade-in value of a new car isn’t going to be nearly as good as the original cost.
• More expensive, more debt. A new car is going to cost more than a used car. This is true in nearly all cases outside of vintage vehicles. Because a new car is more expensive, you’ll be in more debt if you’re financing. That means you’ll have higher monthly payments, and you’ll likely pay more in interest over time.
• Higher insurance rates. In addition to being more expensive up front, new cars are more expensive to insure. Replacement values are higher for new cars, which means you’ll have to pay more for insurance.

Buying a Used Car:

While there are both advantages and disadvantages to buying a used car, it’s most likely the best choice for the majority of people. Here are a few of the reasons why a used vehicle may be the best choice for you and your wallet:

Advantages of a used Car Loan:

• Lower car insurance rates. Buying a used car is going to be more affordable in more ways than one. Generally, insurance is more affordable xon a used car because the vehicle has already depreciated. That makes it less expensive to replace if it is damaged in an accident.
• There’s less stress about keeping the car pristine. When you purchase a used vehicle, which has already depreciated, there’s less stress about making sure the car stays nice. With a new car, any dent or scratch can decrease the resale value significantly. With a used car, this isn’t as much of a problem. Whether you’re looking for a first car, a vehicle to drive to work or something to drive the kids in, a used car may be a better option for this reason.

Disadvantages of Buying a Used Car:

• You might have to compromise on color, features and options. When you shop for a used car, you might have to go with the car that’s the best overall deal or with what’s available in your area. You may have to compromise on the vehicle’s color, interior, features and options. But keep in mind that it’s more important to pay attention to the vehicle’s year, mileage and overall condition.
• Most used cars are sold as-is, so there’s less protection and usually no warranty coverage. This is another reason that buying a used car is a little riskier. If you find a used car that you’re interested in, it’s important to have it inspected by a trusted mechanic before you make a purchase.
• Financing will likely be more expensive. Lenders see a slightly higher risk with financing used cars, so they charge higher interest rates on used car loans. That means you’ll probably have a slightly higher monthly payment. The best way to avoid this is by getting pre-approved for financing before you shop. Be sure to check with your credit union first for the best rates.