If you're trying to decide whether to buy a used car, it's a good idea to consider the advantages and disadvantages when compared to buying new. Factors mainly center around costs involved with both options, warranties and reliability issues. If you can afford it, buying a new car can be easier because you're more likely to quickly find what you want, but used cars come with several advantages, too.
Initial Costs
A used car generally costs much less up-front. According to Cars.com, CNW Marketing Research determined that in 2008, the average cost for a new car before taxes and fees was about $25,500, while the average cost for a used one was about $8,200. Additionally, insurance usually is less expensive for an older car. You also can save on insurance if you buy the used car outright rather than finance it, because you can choose not to buy collision insurance. Buying a used car with cash is more common because of the lower price.
Financing
If you do finance a car, used vehicles can have higher payments because the financial institution is not willing to extend the loan over 4 to 5 years. Interest rates also tend to be higher on used cars. Additionally, new cars are often available with incentive programs such as very low percentage loans or even zero-percent financing.
Depreciation
Used cars do not depreciate nearly as much as new cars, an important consideration if you're not planning to keep the car for several years. According to Consumer Reports, new vehicles usually lose around 45 percent of their value within the first 3 years. This compares to the average depreciation rate for all vehicles of about 7 to 12 percent, as cited by SafeCarGuide.com.
Maintenance
Used cars are more likely to need repair work and usually do not come with a warranty. Additionally, the previous owner or the used-car dealership may not disclose all the problems with the car, and you usually won't know if it was maintained regularly. However, typical repair problems involve replacing parts such as brakes or the exhaust system, which would not come close to costing as much as a new car. The main disadvantage is a higher likelihood of highway breakdown.
Warranties
New vehicles are covered under warranty for 3 years or longer. Additionally, people who buy new cars with significant repair issues have legal recourse under state "lemon laws." However, if an individual buys a late-model used vehicle, the original factory warranty can be transferred, often at no cost.
Certification
A different type of warranty is available for many used cars under a certified pre-owned (CPO) program. These programs are only available for late-model vehicles with low mileage and no previous major damage. Many previously leased vehicles qualify for this program. The dealerships thoroughly inspect the vehicles, using strict guidelines as to which vehicles qualify for certification. A warranty is then offered which extends beyond the original factory warranty, often including the same features as a new vehicle warranty.
Specific Features
If you have very specific vehicle options in mind, such as color, trim and interior design, an exact fit is harder to find in a used car unless you have the patience to wait. Additionally, buying a used car sometimes means you won't have the latest safety features, which might include more airbags or electronic stability control.
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