Do you recall when new and used car prices skyrocketed during the global chip crisis?
It was a pandemic-era phenomenon that negatively impacted automakers. Lockdowns shut down microchip-making facilities, which led to shortages. According to some experts, the chip crisis isn’t over yet. The pandemic is done, but the impact of the chip crisis lingers.
If seeking a car, you can find some good deals. That’s especially true if you buy a used vehicle.
Should You Go New or Used?
According to Kelley Blue Book, the average buyer spent $47,218 to get a new vehicle in March 2024. It adds that used car listings at the end of March 2024 averaged $25,540.
If you take your time and perform due diligence, a used car can offer great value. With that said, consider these eight reasons why you’d be crazy to buy a new vehicle over a used one.
You’ll Lose Money Right Away…
Ramsey Solutions reports that a new vehicle loses approximately 9% of its worth once you drive it off the dealership lot. That means if you purchase a brand-new ride for $45,000, you’ll lose $4,050 to depreciation right away. Do you have that kind of money to throw away? Likely not.
… You’ll Lose Money Right Away
Few consumers can afford the sort of depreciation that comes with buying a new car. It’s a big pill to swallow. Someone with deep pockets can deal with that depreciation. But most consumers should avoid new-car depreciation like the plague.
Higher Insurance…
Bankrate reports that car insurance in the U.S. costs an average of $2,278 annually. Depending on various factors the where you live and the car you drive, you may pay more or less than that. Getting insurance for a new car might be cost-prohibitive – especially if you buy a high-end ride.
… Higher Insurance
You can save money insuring a used car over a new one. It’s not always the case since different factors come into play. But, generally speaking, a used car can save you money. If it’s a high-mileage vehicle, you might want to skip certain coverages that boost the price.
More Expensive…
An important consideration is the cost. During 1Q24, auto loan balances increased by $9 billion to total $1.62 trillion. People are taking out car loans they can’t afford. It can become a debt albatross. If you must take out a loan for a new-to-you ride, a used car will set you back less.
… More Expensive
Do you want to go deeper into debt to get that new car smell? You’ll save money by purchasing a used car and getting it detailed. It might not smell like a brand-new car. But a used vehicle in good condition will look great, cost less, and give you the transportation required.
Swallow Big Depreciation…
When buying a used car, you can avoid the massive depreciation hit. Buying a brand-new vehicle means shouldering depreciation. But if you purchase a car several years old, the previous owner will have eaten the depreciation in advance.
… Swallow Big Depreciation
The depreciation hit is much less with a used car. An older vehicle in good condition can, if maintained regularly, hold a consistent value over the long haul. That’ll be helpful if you want to trade it in later to get another vehicle.
Fret About Bumps and Dings…
After buying a brand-new car, you’ll be more concerned about bumps and dings. These issues occur in parking lots, driveways, and elsewhere. Whether due to carelessness or deliberate intent, you don’t want this to happen to your car. But the emotional impact will be less if your used vehicle already shows signs of use.
… Fret About Bumps and Dings
One source notes that almost one in four — 23% — American motorists acknowledge damaging someone else’s parked vehicle and close to six in 10 — 60% — say someone else has damaged their parked car. No one wants to experience this scenario, but it’s easier to accept with a used car.
Used Can Be Just as Reliable…
Are you worried about buying a used car? One option that’ll help you sleep better at night is a certified pre-owned vehicle. Such vehicles undergo detailed inspections. That means they can be a better choice than buying used cars lacking this certification.
… Used Can Be Just as Reliable
A certified pre-owned car that has been extensively examined and repaired will be dependable. The reliability will be on par with a brand-new ride. While it’ll cost more to buy a certified pre-owned vehicle than a traditional used one, it’ll still be cheaper than purchasing a brand-new car.
Harder to Research Reliability…
A used vehicle has a longer track record than a new one, making research easier. Check out how previous model years have held up if a certain make and model interests you. You might get a better overall deal on a used car with a good reputation than an untested new model.
… Harder to Research Reliability
There are reputable online resources for car reviews. Looking through various model years of a particular car you want will give you details about the pros, cons, best model years, and worst model years. An educated car buyer is less likely to have buyer’s remorse.
Tie Up Too Much Money…
According to NerdWallet, the average monthly payment for new cars is $735. That tally drops to $523 for used vehicles. That’s a lot of money either way, but a new car can break the bank. If you go the used car route and save money, you’ll have more funds for other vital matters. You can save, invest, or pay off your car loan faster.
… Tie Up Too Much Money
What happens if you finance a brand-new car for a ridiculously high amount, lose your job, and struggle to pay on time monthly? That can ruin you financially. Don’t think you have to use the entire amount a bank approves you for. The bank might approve you for a $35,000 loan. But it’ll be worth your while to spend less so you have more financial flexibility.
Buying a New Car? Give Your Head a Shake!
Nothing is stopping you from buying a brand-new vehicle. It’s your right. But you’ll be better off investing in a quality used car than overspending for a new one.
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