Buying a car is a significant investment, and the price tag on a new one can seem incredibly steep. But financial support from a loan doesn’t have to be the only way people can get a car.
A second-hand car can be a great option if you’ve got your eye on a particular vehicle but don’t want to sit on a multi-year payment since new cars depreciate as soon as they leave the lot. The following post will outline the pros and cons of buying a new vehicle vs. a second-hand one so you can make an informed decision.
Why Buy A Brand New Car?
There are many reasons people prefer buying a brand new car over a used one. Aside from the fact that most people prefer to buy something that they are the first to use, there are other more prominent reasons. For example, new cars often come with warranties, are less prone to failure, and require less upkeep.
Moreover, you usually get fantastic service if you buy from the right dealer. In fact, as this Audi dealer recommends, you can use their website to find a wide range of quality vehicles and contact them directly once you have found something you are interested in. While the process is often the same for used cars, it can sometimes be the case that those buying a new model get preferential treatment (however, this isn’t always the case).
Ways To Fund Your Purchase
Because new models tend to be more expensive than their used counterparts, you will have to find ways to fund the purchase. Fortunately, you have several methods at your disposal.
Loan
A car finance loan is a type of loan that allows the borrower to use their vehicle as collateral for the loan. The borrower can pay off the loan over time with fixed monthly payments or in full at the end of the term. Most dealerships will offer you some form of financing, or you could find your own loan provider. However you go about it, this is usually the most common way to buy a new car.
Lease
A car lease is a contract that allows the lessee to use a vehicle for a certain amount of time. If you decide to lease the car, you will never actually own the vehicle, but you will have the chance to upgrade it at set periods.
Pros
- It will have a warranty: this is arguably the best part of a new car. Almost all brands come with at least three years of cover if something goes wrong.
- You will have the latest tech: Technology moves rapidly, and what was hot last year is not this year!
- They are less likely to break down: New cars have never been used, so you avoid the wear and tear of a used car.
Cons
- Depreciation: As soon as you drive off the lot, the value will drop, and then you can look forward to at least a 15% drop each year (depending on many factors).
Why Buy A Second-Hand Car?
Buying a second-hand car is a great way to save money and get a quality vehicle at the same time, but there are also other reasons why you should consider buying a second-hand car. You will also have more flexibility when it comes to funding the purchase and buying extended warranties.
Ways To Fund Your Purchase
Because these cars are often far more affordable, you have a lot of flexibility. You can find a loan with favorable rates or use savings.
Private Loan
Even though used models are far cheaper to buy, they are not an insignificant expense. Nonetheless, you can find outstanding loans with affordable monthly payments by looking around. Additionally, your monthly payments will be lower because your loan amount will be smaller.
Savings
Using your savings is not an option for a new car because of the depreciation. However, it can be a great way to buy a used one.
Pros
- Lower cost: As mentioned throughout this post, a used car is usually cheaper than a new one. Cost is often the reason that people give when they opt for a used car vs. a new one.
- Modern cars are highly reliable: Reliability is not an issue with modern cars, so you can walk away with something that has 30,000 miles on the clock and still feel as good as new.
Cons
- No warranty: Although this is a con, you can usually buy third-party cover for peace of mind. However, this is an extra expense when it comes as standard with a new model.
- Limited choice: New-car buyers typically have the option of selecting features, colors, and accessories they wish for their chosen model. You may need to be more flexible with used cars, or you may need to wait until you see the model you want.
Both new and used cars have pros and cons, and the path you choose will heavily depend on your circumstances. To determine the correct answer, you will have to weigh the pros and cons presented in this post.
