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New cars vs. used cars
Something old or something new? Make the right decision and drive away without regret.
It’s the age-old question that every car buyer needs to decide: should I get a new or used car? A new car won’t have the same risk or wear and tear as one that’s been used, but it’ll cost you more.
New vs. used cars in a nutshell
|New Car||Used Car|
|Price||Generally costs more and depreciates immediately||Generally costs less and retains its value longer|
|Car options||Lots of options that you can customize to your needs||You’ll face a limited selection depending on your location|
|What you need to know||Know how to avoid expensive sales tactics||Know what to look for in a used car and how to avoid a lemon|
|Financing options||More options with lower interest rates||Fewer options with higher interest rates and more stringent requirements|
|Information available||Manufacturer stickers, dealer documentation and up-to-date reports||Typically general information only, and private sales may have none; companies like CARFAX may be able to provide a vehicle history report, but these reports may have errors or be incomplete|
|Warranty||Manufacturer and dealer warranties are available||Varies depending on the age and condition of a car; new car warranty may still be in effect or the manufacturer may have extended warranty options available|
What factors should I consider?
Financing options for new and used cars
Financing a new car
It’s likely that if you have decent credit and are looking to buy a new car, you’ll be given a lower interest rate than someone looking to finance a used vehicle.
Since you’re still paying a premium price for a new car, you may need to borrow more. This means that whatever you’re saving on interest could be negated by the higher price tag on your new car. On the other hand, special offers on a new car may offset its higher price tag, and you may actually be getting a comparable or better deal than if you bought used.
Financing a used car
A used car may have a higher interest rate, but you’ll likely be paying less than you would for a new car. The downside? Some lenders only finance a used cars under a specific amount of miles or under a certain age.
Secured vs. unsecured loans
Secured loans can give you better interest rates because your using your car as collateral. This means if you default then your car can be repossessed by the bank.
If you aren’t interested in using your car as collateral, there are still other ways to finance your vehicle. You may want to consider an unsecured car loan.
Used cars are considerably cheaper, but you’re not getting the first-owner benefits that come with buying a new car. Take your personal financial situation into account, and be sure to take your time making this decision. After all, whichever you choose, it will likely be with you for at least a few years.
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