News

NEW CARS VS. USED CARS

Q-and-a- sept-7

Q: I’m thinking it’s time for new wheels. Should I spring for a new vehicle or buy a pre-owned one?
A: Choosing between new and pre-owned cars can be a complicated decision. To make your job a little easier, we’ve outlined the pros and cons of each purchase type below.

Pros of new cars

  1. Status symbol - The allure of owning a new vehicle is obviously its attractiveness.
  2. Fewer repairs - You can assume you won’t be dealing with major repairs or maintenance issues for a while.
  3. Easier shopping - There’s no need to drag your prospective new car to the mechanic to check it out.
  4. More financing options - You’ll be offered attractive incentives, like cash rebates from the carmaker and better interest rates from the lender.
  5. Improved technology - Recent models have incredible technology, such as programmable settings, autonomous emergency braking and adaptive cruise control.
  6. Automaker’s guarantee - New cars come with warranty coverage for their first three years or 36,000 miles, whichever comes first.

Cons of new cars

  1. Price - Of course a new car will cost more. But, what makes it more painful is the fact that you can get a comparable vehicle for much less.
  2. Depreciation - New cars go down in value as soon as they leave the lot, often by 20%. At the end of the first year of ownership, your new car can drop another 10%.
  3. Higher premiums - Insurance companies charge more for newer vehicles.

Pros of used cars

  1. Price tag - It’s not unusual to find a used car in decent condition with a price tag that’s 30% lower than a similar brand-new model.
  2. Less depreciation - With the previous owner absorbing the initial depreciation on the car, your vehicle will only experience a minimal drop in price.
  3. Lower insurance - With your car weighing in at a lower value, your monthly insurance premiums will be lower.
  4. Lower interest - If you finance a used car, you’ll likely have a higher interest rate. However, since the loan amount is lower, you’ll save in total interest payments over the life of the loan.
  5. Predictability - When buying a model that’s been around for a few years, you’ll have a wealth of research available on your car and can know what to expect.

Cons of used cars

  1. Complicated purchase - With a used vehicle, you’ll want to get a vehicle history report and bring it to a mechanic for an inspection.
  2. Fewer choices - When buying pre-owned, you don’t get to be picky about things like colors and features.
  3. Risk - Even if you do your homework well, you run the risk of walking out with a lemon when you buy a pre-owned car.

Whether you choose to go new or previously-owned, don’t forget to click, or call City CU at (214) 515-0100 to hear all about our auto loans.