We’ve come across many people who’ve asked whether they should get a used car or a new car. So, they look at the price difference right away. However, there’s more to a car than it’s price tag. It also requires people to look at its functionality in the person’s daily life. Plus, if they can afford a car and the gas, then what’s there to worry about? You see most people think that just because you have enough money to finance a car whether it’s new or used, the new one will always win. Why? Well, just because it’s new. But, there is, again, much more than what meets the eye. So, let’s go through the different aspects of both used and new cars.
What do you consider the most when purchasing something? The price right? Let’s put it this way. What if you have the money to buy a new car? You’d rather just buy a new car instead of a used car. It’s an easy decision. But, if you look closer at the depreciation of a new car, you would actually notice that buying used cars are better. In our previous blog post, we posted how fast a car depreciates:
Initial cost: $33,560
Cost of after 1 year (about 25%): $25,170
Cost of after 3 years (about 46%): $18,112.40
Cost of after 5 years (about 63%): $12,417.20
In this case, you’ll see that the average cost of a new car in the year 2016 is about $33,560. That’s a year’s wage for some. So, that’s a lot of saving and probably the new car will cost a little bit more depending on the interest of the car loan. When you buy a new car, you’re really losing more than you’ve paid for. While a used car doesn’t depreciate as fast as a new car, it still has its flaws. Most used cars are either second or third hand cars. But beyond this, there might be some issues. This is why it’s important that you go through the checklist of making sure that the used car you’re buying is at its best shape.
This is the biggest part of owning a car: the paperwork that comes with it. When you’re buying a new car, you’re dealing with professional sales persons. This means that they’re there to get you as interested as possible and close a sale. Once the sale happens, they provide you all the needed paperwork and help you go through it. Afterwards, when you’re ready to drive out of their dealership, they’re basically done. Plus, you will mostly not have any warranty. So, if there are any problems that pop up, then you’re likely to get it fixed and pay for it yourself. Unlike new car dealers, most used car lots do offer warranty. Plus, they do all the paperwork for you. This includes ownership or title transfers as well as registration.
This is probably the best part of BHPH or used car dealerships. They accept trade-ins. Not every car lot accept trade-ins but most do. And if you find a lot or dealership that allows for trade-ins, this means that you’ll have to pay less. Especially if you’re planning to get a car loan, you’ll have less money to worry about. However, on the flip side, they try to buy your existing car for a much lower price. So, maybe trade-ins may not work in your favor. For new car dealerships, they usually don’t accept trade-ins. Sometimes, new car dealerships may have promotions wherein they will offer to buy your car and then you’ll just pay the remaining amount. What’s not good with this is, they usually only offer the more expensive cars available. So, really, you’re not saving much. Plus, the sellers generally want money and cold hard cash, not your current vehicle as there’s nothing they can really use it for.
Generally, every car that’s under a car loan that doesn’t get paid will run the risk of being repossessed. Whether you bought it from a used car dealership or a new car dealer, you’re always going to have this risk. However, it only really happens when you spend on something you can’t afford. This means that you buy a new car that you can’t afford and think that you can push off not paying for it for a month or two without repercussions. Well, we’re here to tell you honestly that there are repercussion for everything dealing with money. So, make sure that you’re buying a car that’s within your budget, so that your car doesn’t get repossessed.
Another risk is having a broken down car. This is more on used car dealerships. Sometimes, used car lots don’t care about the maintenance of the cars. Some cars are just stocked out in a lot or at the back garage. This means that they aren’t started very often, so the insides can deteriorate more quickly. So, it’s suggested that you invest in paying a good mechanic to take a look at the used car you’re looking at. If you can’t find one, ask your friends. Or, use the checklist that we’ve linked above to help you out.
Another risk you could run into is the legal protection. Most BHPH dealerships or lots follow strict laws depending on the state and federal laws. Therefore, you’re more protected with used car dealerships in essence. If you run into problems, such as a dealership selling you a lemon or a salvaged vehicle that wasn’t disclosed before buying, you can sue or the dealership could close down. However, new car dealers aren’t usually bound by the same strict laws like BHPH dealerships.
There are a lot of things to think about when purchasing a car. Consider some of the things we’ve discussed here. If you have any questions, don’t hesitate to give The Auto Warehouse. We’re more than willing to help and show you several payment plans that would fit you budget together with a car that would fit your lifestyle!