Should You Buy a New or Used Car?

The debate over whether it's smarter to buy a new or used car is common. There are both pros and cons of purchasing a used car instead of a new car. In the end, it depends on your personal financial situation and what you truly want out of your next vehicle purchase.

Cost

Used cars are always less expensive than comparable new cars. If you're on a tight budget, then buying a used car might be the best option for you. Some people purchase used cars even if they're not on a tight budget because it brings luxury brand vehicles like Audi, BMW and Mercedes within their desired price range. Without purchasing a used car, they might not have been able to purchase a luxury vehicle.

Depreciation

After you purchase a new car, it will lose about 40 percent of its value after three years, according to MsMoney.com. After three years, its rate of depreciation will begin to slow down. Many people purchase used cars that are older than three years because they don't have to worry about depreciation as much as they would if they purchased a new car.

Maintenance

One advantage of buying a new car is that new cars require less maintenance than used cars. New cars usually don't require maintenance aside from an oil change within the first two years of ownership. Used cars are more likely to break down and can require major repair jobs depending on how many miles they have and how well they were maintained by the previous owner.

Warranty

Companies usually provide at least a three-year warranty on new cars. This means if anything goes wrong with the car within the warranty period, it will be fixed for free. Some higher-priced vehicles even have four-year, 60,000-mile warranties. In addition, manufacturers include warranty coverage for the powertrain of new cars, which is a major plus. Older used cars commonly have powertrain problems, which can be expensive to repair.

Insurance

Used cars are less expensive to insure than new cars, according to "Consumer Reports." Newer cars are the most expensive to insure because their parts are more expensive to replace.

Safety Features

Newer cars tend to have newer safety features that older models might not have, according to "Consumer Reports." If safety is your main concern, consider purchasing a new model.