As a young professional, you definitely need reliable transportation. And while it pains you to admit this, your current vehicle seems to be on its last legs — er, wheels. Plus lately, during your commute to work, your vehicle has been making some odd noises and has racked up a ton of miles.
As you prepare to start the process of looking for a new car, know you have plenty of options, such as buying new or opting for a used vehicle. With these choices comes questions. For instance, is buying new a better long-term investment, or will a used car be the smarter way to go? To help you decide, let’s take a look at the pros and cons of buying new versus pre-owned:
The Plusses and Minuses of Buying a New Car
If you're looking for the latest bells and whistles in a vehicle, it's hard to beat a brand new car. Technology is changing so rapidly that even a vehicle that was manufactured a couple of years ago will likely not be as advanced as the new models on the car lot.
Additionally, there's also something exhilarating about buying a shiny, new car; after all, you don’t have to wonder if anything is wrong with it, and that new car smell can be intoxicating. Moreover, newer vehicles are typically under warranty for the first 25,000 to 30,000 miles (these things vary) or the first two years of your lease or purchase.
On the flip side, buying new does tend to cost more. When you factor in a typical 4.5 percent interest rate and $3,000 down payment, you'll likely wind up paying about $425 a month. The average amount that is financed for a three- or four-year-old car is around $19,000, and when you factor in interest and down payments, the monthly payment is around $344.
Depending on your income, this difference could definitely make or break your monthly budget. Another disadvantage of buying new? You'll lose money on it the second you drive it off the car lot. That's because newer vehicles depreciate significantly during the first few years, so you're essentially paying top dollar for something that quickly loses its value.
The Pros and Cons of a Pre-Owned Vehicle
Meantime, experts say the greatest advantage of buying used is that the previous owner took the “depreciation hit” on the car. Additionally, you'll typically pay less for a used car, and since many pre-owned vehicles were originally leased by the owner, it's quite possible to find plenty of used cars with low mileage that are only a few years old.
Conversely, you may need to bring in a used car more often for repairs and question its reliability and/or why the previous owner sold it in the first place. To help put your mind at ease, look for certified pre-owned vehicles at any local dealership and ask about whether it's under warranty. Many dealerships include a limited warranty on their used cars.
You can also replace some of the parts and components of a used vehicle for a relatively small price. For example, to extend its life and comfort, look into replacing any older and perhaps off-brand tires right away with four new ones. When shopping for new tires, do some online research on sites like TireBuyer.com and go with a popular and established brand like Firestone.
And the Decision Is…
After weighing the pros and cons, buying a pre-owned vehicle with low miles seems to be a wise and prudent choice. While there are advantages to buying a new car, going with a good-quality used car that has been carefully checked over by a mechanic, comes with a warranty and can be spruced up with brand new tires is the soundest investment.