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Should I Buy a New or Used Car?

Looking for a new car? With so many options out there, it can be tough to know whether a new or used car is the best choice for your wallet. After all, a car is one of the most expensive purchases most Americans will ever make. 

It can take years to pay off a car. And to make it worse, some car buyers negotiate themselves into a hole because they never accounted for all the details of car ownership.

There isn't one right answer for everyone. When researching whether to buy a new car or a used one, you'll find a long list of pros and cons is unraveled. Both options are attractive in their own ways, but oftentimes the right answer for any two car shoppers is different. It all comes down to your personal needs and finances.

Some main factors to consider when choosing between a new or used car are the following:
  • Warranty 
  • Rate of Depreciation 
  • Safety 
  • Repair Costs 
  • Annual Percentage Rate (APR) 
  • Down Payment

A warranty ensures that you're covered - if your car should happen to have some major mechanical issues. It's one of the greatest advantages to buying a new car over a used one. Most auto manufacturers offer at least a 3-year warranty with a new car. When shopping for used or pre-owned cars, you may be taking a big chance if no warranty is offered. 

It's one reason people are - and should be - hesitant to buy a vehicle off a site like craigslist or ebay. Used car not under warranty? You're going to have to front the cash for any type of mechanical problem. If the issue was not caused by anything you did, you're just plain out of luck.

Remember to always learn what's covered in a warranty before assuming that you're covered for anything. Auto manufacturers offer what's called "powertrain" warranties - things like oil leaks, engine repairs, and faulty transmissions.

Certified Pre-Owned Warranties

But let's not jump to conclusions and say that buying any used vehicle is a gamble. Reputable car dealerships sometimes offer warranties on used cars, especially certified pre-owned vehicles. You may be paying slightly more to buy a car from a dealership than an independent seller on craigslist, but you'll end up saving a ton of money if you eventually find out the car has major issues. 

A certified pre-owned vehicle, or CPO, offer a full warranty, meaning the dealership will pick up the cost for the most mechanical issues that could arise. In addition, dealers typically offer options to extend the warranty on certified pre-owned vehicles, giving you peace of mind. View our comprehensive guide on the difference between used and certified pre-owned cars.


Signing for a 5 year car payment plan sometimes makes car shoppers think twice about buying new. After all, that's just the price of the car alone. What if - god forbid - you have to repair the car after an accident or you lose your source of income? 

Since the total cost of a new car tends to be significantly more than a pre-owned vehicle, it may take years to pay off a new car. The cost of a used car is one of the main reasons car shoppers end up with a pre-owned over a new car. When buying a pre-owned, you can oftentimes get a nicer model for the same cost a new, more basic model.

However, there are ways to secure a great deal on a new car. If you're interested in buying a new car and you have the money, offering to pay a large down payment may help you negotiate towards a lower interest rate on a loan and decrease the amount of monthly payments you have to make. 

Better yet, if you wait for special offers or take advantage of dealer incentives, sometimes dealerships will offer discounts, low interest, and rebates to help customers save. It's not all that uncommon for dealerships to cover some or even all of a new car's down payment with certain time of year specials. 

Buying a new car may seem much more expensive, but it works out very well for some. If you can manage to pay off a new car within 3-5 years, it means you can expect to drive that same car payment free for about 5-7 more years. It's very unlikely that a used cars with tens of thousands of miles on it will last so long. 

 If you're leaning towards a new car, remember to cushion the amount you can afford. Try to anticipate unexpected costs that may arise.  

If you plan on buying a new car, it usually means committing to that car for around 5-10 years. Unless you can afford to buy the car outright, you're stuck with it. 

However, that's not necessarily a bad thing. 

Car ownership comes with emotional attachment. In time, most people grow to love their car and would not want to switch it up anyway. Plus, owning a car means you're building equity, or an asset that can be sold later on down the road. 

Even though your car loses value through what's known as depreciation, selling a car that you keep in good condition can help contribute towards your next set of wheels. 

Let's say you buy a new car for $20,000. If you can pay it off after 5 years, and then it lasts for 5 more before it comes time to sell, you'll probably only receive a fraction of what you originally paid for the car. Maybe you can only sell it for $4,000, a fifth of its original cost. 

$20,000 minus the $4,000 you get back from selling the vehicle means you spent $16,000. That averages out to $1,600 for each year you owned the car. That's a great deal, all things considered. 

A used car probably won't last you as long as a new one. Buying a pre-owned means you won't receive as much of a return because you're putting even more miles on an already used car. But it also means you won't be stuck with the same car as long. 

If you love driving a new car but prefer to ride in a new car every couple of years, leasing might be for you. Check out this guide on leasing vs buying a new car to compare these two options. 


Pre-owned cars are great because they - hypothetically - cost less than a new car. However, depending on the condition of the car, you might need to take the vehicle to the mechanic more often that you would like.

One benefit of new cars to pre-owned is that new cars generally do not need a lot of repairs. And, should a new car require repairs, it's usually covered under a warranty.

If you're buying a used vehicle, expect to spend some time at the shop. At best, you might need to take it to the shop once in awhile when you plan for it. At worst, the car will break down at inopportune moments, possibly making you late to work or interfering with other commitments. 

New cars tend to be more reliable in general. You know exactly what you're getting and the auto manufacturer has you covered. If you go with a used car - especially one with over 100,000 miles - you should anticipate a one or two unexpected trips to the mechanic a year.


Safety is probably the most important aspect of car shopping. Nobody wants a car isn't up to safety standards.

The biggest problems with pre-owned vehicles is that, unless you're shopping from a dealer, you can never be sure the person selling you the car is honest. Things like accidents and flooding decrease the value of a car, and individual sellers want to make as much as they can from a pre-owned. Use your best judgment when dealing with an independent seller.  

If you're looking at used cars, be sure to ask for a history report. That way, you'll know if the car has undergone serious accidents and if the odometer is accurate. It's recommended that shoppers take a pre-owned vehicle to a mechanic for a full inspection before purchase, unless it's under warranty from the dealer.

As for new cars, it's easy enough to access safety ratings and information on the internet. Sites like safercar.gov and Edmunds.com offer reliable, non-biased reports on safety ratings by car model. A new car does not mean it's safer than a used car. However, you can usually count on a new car's breaks and air bags to be up to snuff.


Let's review the benefits of buying a new or used car. Remember, there isn't a one-size-fits-all answer to the question of buying a new vs used car. However, there is a best answer for you. Here's a takeaway of the points discussed in this article:

  • New cars are usually backed by a warranty from the manufacturer.  
  • Some pre-owned cars - like certified pre-owned vehicles - come with a warranty from the dealership. 
  • A used car typically costs significantly less than a new car. 
  • In general, new cars rarely need repairs, unlike pre-owned vehicles.  
  • Always ask for a history report if buying a pre-owned to verify the information provided.