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Car buyers often walk into a car lot with their sights set on the shiny new car they’ve been dreaming of. But what if a brand-new car isn’t necessarily the right choice for you? There are plenty of advantages to owning a new vehicle, but it’s not your only option (and it might not be the best one right now, either). There are a lot of factors to consider before jumping into this investment, so it’s crucial to know how used and new cars compare to one another.

Monthly Payments

The first – and most important – question to ask yourself is, “What can I afford?” You don’t want to end up having years of payments with a monthly amount that’s out of your budget. New cars sometimes come with fantastic manufacturer rebates and incentives that can keep your monthly payment down, but they’re still usually higher than their used versions. Insurance companies also charge more for new cars than used cars, so your insurance payment will boost your overall vehicle costs each month.

It’s a good idea to visit or contact a trusted dealership to compare new and used prices, if available, for your chosen vehicle, just to see what financing options might fit better into your budget.

Loans – Paying Off Your Car

Loans for new cars typically range between four and seven years, while used car loans often don’t last longer than four years. Consider how soon you’d like to pay off your car by taking into account your future financial goals that could affect your decision, like making a career switch or buying a home.

You can pay off most loans early without penalty, but a larger, longer loan on a new car will require you to have more money on hand to do so than paying off a shorter, smaller used car loan.

Warranties on Used and New Cars

Both used and new cars can come with excellent warranties, but used cars may only have a short term left from the date of purchase before the warranty expires. New cars often come with a minimum of a 36-month limited warranty to cover repairs and maintenance costs, sometimes also including powertrain and roadside assistance coverage and other benefits.

If you’re considering a used car but want some warranty protection, it’s best to look for a car that’s only a year or two old. You can also ask the dealership about extended warranty options for your vehicle to keep your repair and maintenance costs down for a few more years.

Used vs New Car Depreciation

Did you know that used cars depreciate slower than new cars? When you buy a new car, its value tends to drop significantly in its first couple of years as new models arrive. After that time, a car’s value depreciates much slower, which is good news for used car buyers.

If you’re considering only having your vehicle for a couple of years before upgrading, then buying a used car that’s at least two to three years old is usually a better choice than a new vehicle because it won’t depreciate much in that time, meaning that you won’t lose as much money with your sale.

You may not have walked into a dealership to buy a used car, but remember that used doesn’t mean old or worn down. Used cars have several advantages for buyers who want lower, fewer car payments without necessarily sacrificing the appeal of a new car. If you think buying a used car might be in your best interest right now, we invite you to contact Car-N-Credit to learn more about our inventory and financing options.