16 Things to Know: Buying a Used Car or New Car

February 12, 2020 Happy young people near new car on nature

I’m sure you’ve heard the advice never to buy a brand-new car because it decreases in value as soon as you drive it off the lot. That advice happens to be correct, but there are always exceptions to the rule. Not all vehicles depreciate at the same rate. In fact, some brands and models are known for maintaining their value quite well. When you take into consideration new car buying incentives, such as cashback and low-interest financing, there are some instances when buying a new vehicle doesn’t cost much more than buying a car that’s one or two years old. 

If you are trying to decide between buying a used car or a new car, there are other factors you should consider as well. This guide will walk you through some of the more important factors when deciding between a used car and a new car.

What You Need to Know About Buying a Used Car

Research, research, research! When considering a used car versus a new car, there are many things you need to research and take into account.

Focus on Dependability

As a car gets older, dependability becomes a priority, especially when the warranty ends. When you begin researching used cars, target vehicle models that are known for long-lasting reliability.

Know the Value

After you have researched and come up with a list of dependable vehicles in your price range, you need to educate yourself on the value of the cars on your list. Several things affect a vehicle’s value, such as:

  • Vehicle model
  • Vehicle year
  • Vehicle condition
  • Vehicle mileage
  • Vehicle equipment levels
  • Vehicle’s location/region

Upgrade to a Luxury Vehicle

Because you are saving at least 30% on a used car as opposed to a new car, you may be able to afford a nicer vehicle, maybe even a luxury model.

Be Mindful of Costly Add-Ons

If you are dealing with a car dealership, chances are they are going to try to get more money from you by offering you add-ons, just like with a new vehicle. You do not have to buy them. The dealerships provide the add-ons to help maximize their profits on the sale of their vehicle, such as:

  • Service contracts
  • Extended warranties
  • VIN glass etching
  • Undercoating
  • Paint sealants

Preapproved Financing

Before you start shopping, go to your bank or credit union and apply for a loan. There are advantages to being preapproved for a loan. First, you will know your price range before you start looking at vehicles. Second, when the dealer finds out you have been preapproved, they may even try to beat your bank’s interest rate. 

Hire a Mechanic

If the dealer allows it, you should take the vehicle to a qualified mechanic that does automotive diagnostic testing, one that knows how to inspect used vehicles. Don’t settle for the dealer telling you that they’ve inspected the car for you. Insist on having it done by an independent third party.

Skip the Extended Car Warranty

If you’ve done your homework and researched the vehicle you are considering buying, you have probably chosen a vehicle with an excellent reputation for long-lasting dependability. According to the statistics, the premium you pay will rarely equal the cost of repair claims down the road. 

Lower Car Insurance Rates

Used vehicles are cheaper to insure than new vehicles. It doesn’t cost as much to insure your vehicle when you’re buying full coverage and collision coverage. You can also choose to opt-out of the full coverage insurance, which pays for repairs to your vehicle.

Vehicle Registration is Cheaper

The cost of registering a used vehicle is significantly less than the cost of registering a brand new vehicle.

What You Need to Know About Buying a New Car

Let’s face it. Buying a new car is easier and more convenient than buying a used car when car shopping. For new vehicles, you don’t have to spend extra time and money researching a vehicle’s history report to find out if it has been wrecked or flooded. Also, you don’t have to pay an independent mechanic to inspect the vehicle prior to purchasing it. Even though it’s easier, there are still a few things you need to take into consideration when you are ready to start shopping for a car.

Depreciation

As we mentioned before, your new car decreases in value by 10% the minute you drive it off the car lot. It will decrease in value by another 20% within the first year of ownership. By the time your car is a year old, it will have lost a third of its value. 

Do Your Research

Don’t be swayed by the flashy ads. Do your research. Regardless of the type of vehicle you choose, you will want to focus on the following when researching vehicles:

  • Dependability
  • Owner satisfaction
  • Safety
  • Road test performance

Safety is Important

Make sure the model you are looking at offers some safety features, although advanced safety features are best. Advanced safety features can lessen the impact of an accident, reduce possible injuries, and in some cases, they can even help avoid accidents altogether. Although advanced safety features are not available on some vehicle models, they are common enough that if the model you are looking at offers them, you should get them.

Don’t Get Pulled in by Special Events

Don’t let the flashy ads pull you in and sway your decisions. Dealers hire specialists that are trained in techniques that increase the dealer’s profit. Special events solicited by direct mail are one of their more popular methods of drawing potential buyers into the dealership.

Skip the Unnecessary Extras

Most of the profits that car dealers make come from financing and pushing a variety of mostly unnecessary add-on products on you, such as:

  • VIN etching
  • Asset protection
  • Theft protection
  • Prepaid maintenance
  • Extended warranties
  • Key and tire replacement plans

Not all of these are necessary, and for certain things like theft and asset protection, you can get a better deal elsewhere.

Avoid Hidden Fees

Dealers are very good at adding unnecessary fees to your total bill. Look over your entire invoice for unnecessary charges such as:

  • Destination charges
  • Dealer prep charges
  • Pre-delivery inspection charges
  • Delivery charges
  • Advertising fees

You do not have to pay these fees, and if you see them on your invoice, you should refuse to pay them.

Be Smart About Financing

Try not to focus entirely on your monthly payments. Look at the big picture and consider the impact of your finance strategy long-term. Pay attention to the loan rate, the interest charged, trade-in values, and even the depreciation percentages. Take advantage of any incentives the dealerships are offering, such as cash rebates and lower interest rates.

Shipping a Vehicle You Purchased Online

Chances are, you already used the internet to research vehicles and determine which one best suits your needs and budget. You probably looked up the make, model, and options the car comes with. Buying your vehicle online could be the next step for you.

The internet has new tools and searches that make finding and buying a car online easy and painless. These new tools take into account your budget, fuel economy, space, size, seating, lifestyle, and even the cost of ownership.

Whether you purchase a used car or new car online, you might need to have it shipped to you. Here are some factors to consider when looking for a reputable shipping company:

  • Make sure the company you choose is licensed by the FMCSA (Federal Motor Carrier Safety Administration). Ask to see their six-digit U.S. DOT number. Check their website and advertisements for this number.
  • Your shipper should treat you and your vehicle with respect and professionalism. Pay attention to the way they talk to you and treat you. How well do they answer your questions? Picking a professional carrier will give you peace of mind knowing that your vehicle is in competent hands and will be delivered on time.
  • When shipping your vehicle, it needs to be insured against accidents and possible damages that might occur during transit. You want to pick a carrier that takes care of the liability in case the unthinkable happens. A reliable auto carrier should give you insurance documents that clearly state the policy terms.
  • Read the reviews. Learning from past customer’s experiences will help you avoid a possible bad experience. Check the company’s website for customer reviews, as well as the Better Business Bureau, and Yelp.com.

Bottom Line As you can see, there are many things you need to consider before deciding between buying a used car or a new car. Also, buying your vehicle online can take the stress and hassle out of the whole car shopping nightmare, as well. If you decide to buy your vehicle online, choose your vehicle shipping company wisely. Check out the Nexus Auto Transport Cost Calculator for instant and accurate auto shipping quotes.

Tags: , , , , , , , , ,