When it comes to buying new versus used cars, people often fall into two groups. One argues the benefits of warranty and predictability of maintenance and costs, and the other sees the value in quality used cars without the sticker shock.
What is right for any one individual is driven by this person’s ability to decide on the budget and personal preferences. Some people, for example, are unfazed by minor repairs on a car or fans of do-it-yourself projects. Others may find breaks down and unexpected fixes disrupting to their life.
That is why there is no right or wrong answer. You should begin with asking yourself these questions.
What’s my budget?
Considering to purchase something at a premium while you don’t have the money is a waste of time. Start with a realistic budget that doesn’t stretch your finances, and find your best options within this budget. Match your budget with your other preferences. For example, a used car in a higher class or a new car of a lower class. Cash or loan?
But be careful, the question of new versus used can be specific to what you’re buying. For example, car makes can differ in terms of quality and required maintenance over the life of the car. Every within the make itself, a particular model and year can be better than another. So you might find a used car that fits your budget and last you much longer than a new one.
Convenience & maintenance
New cars certainly come with bells and whistles. But in addition to enjoying the comfort and convenience of new technology, you also will get the car under warranty and with maintenance covered for several years.
This convenience also translates into money in your pocket. You will be able to predict the costs of the car at least for the near future, unlike a used car where things can break down from day one. Having said that, if you’re experienced with cars or you’re buying a car from a reliable dealership, you may be a good insight into the car condition, record of maintenance and future requirements.
Keep in mind that some car makes are much more expensive to maintain. So before you jump into your dream car, think of how much it will cost you to keep up.
To have a realistic maintenance budget, use the internet as a reference or call dealers to check the regular check-up costs as well as parts and labour. This is an exercise you should do with any used car to ensure that you will be able to have expected checks as well as occasional breakdowns.
In addition, think of the cost of not having a car. Will your insurance cover your costs to get a rental? If not, consider your transportation alternatives until the car is fixed.
To sell or to keep
If you’re buying a car to keep for several years, a new car can be a good choice, because by the time you sell it, your payments will be over if you have financed and you still have a good car in terms of age and mileage to sell. If you think that you would sell the car in a year or two, you may end up losing money. Depreciation in new car value is quick, and if you have financed it, you could end up owing more than any price you would get for it.
Getting out a of a car loan can also be costly. Some lenders may have early repayment penalties and require you to pay part of the interest. So make sure that your loan term is not much longer than the time you expect to keep the car — regardless in this case to whether the car is new or used.
Maintenance budget
The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.
New vs. used car
Start with a realistic budget
Balance comfort and maintenance
Consider length of ownership
Think of depreciation on a new car
— RO
