Looking to replace that old jalopy in the driveway? DexKnows lists all the good car dealers in your locality, but there’s one question it can’t answer: Should your next ride be new or used? Here’s a run-through of the pros and cons.
Not much beats the thrill of driving a brand-new vehicle off the dealer’s lot. There’s the peace of mind that comes with knowing the car has never been abused and has a warranty stretching out three to five years ahead. Then there’s the absence of grunge: No previous owner has dropped fries down the side of the seat or had infants throwing up in the back. It’s clean, it’s new and it’s yours.
Another benefit is low maintenance costs. For the first two to three years, your car shouldn’t need much more than regular oil changes. Some dealers include that for a few years in the price of the car.
But – there’s always a but – it’s only really new for a few hours. Then it’s a used car for the rest of its life. So why not buy one of those instead?
Car dealers, especially the big, out-of-town superstores, carry a lot of 2- to 4-year-old vehicles. Would one of those make more sense? Let’s take a look.
First off, a preowned car is less expensive than one that’s new. In fact, many vehicles lose 40 percent or more of their value in the first three years. Let’s take a look at one example: the Ford Fusion.
A new 2010 Fusion SE costs around $21,000. In 2013, according to Kelly Blue Book, that same vehicle is worth $12,000 to $15,000, depending on its condition and mileage. That’s a savings of some $7,000 (and if you’re financing, that means less in interest payments, too).
But once the warranty runs out, if something goes wrong, it’s up to you to pay for the repairs. True, modern cars are far more reliable than they used to be, but the risk of mechanical or electrical failure still rises with age. Then there are those items that need to be replaced periodically, such as the battery, brake fluid, shocks and struts. Those costs can all eat into your budget.
The third way
The “new” versus “used” debate needn’t just be about saving money. Purchasing a used car can let you get something a whole lot nicer than if you bought new. Let’s return to our Ford Fusion. A 2013 SE model will run around $25,000, but for the same price, you could have a “certified preowned,” or CPO in industry parlance, 2010 BMW 328i.
A CPO vehicle has been inspected to ensure that it’s in top condition, is up to date with maintenance and it comes with a warranty. (Most manufacturers run such programs.) In other words, a CPO car can be like buying new but at two-thirds of the price. It will have a healthy number of miles on it – 12,000 per year is not unreasonable – and it won’t be the most recent model year.
Deciding whether to buy new or used is a financial decision to be sure, but there are other factors at work, too. The cost to operate and maintain the vehicle and warranty coverage should be considered. Then there’s the question of what kind of car you want to be driving. Use DexKnows to find your local car dealers, then head out and take a spin.