New or used? What type of car should you buy?

Next to a home, the second biggest cost most people will ever have to finance is a vehicle.

And like any big purchase, it’s important to get this one right—since getting it wrong could lead to years’ worth of regret about what you should have or could have done.

But when it comes to buying a car, there’s a decision you need to make before you settle on Buick, GMC, Chevy or Cadillac… You need to figure out whether you’ll be buying new or used.

The good news with this decision is that there’s not necessarily a wrong one, as both have their fair share of pros and cons. That said, it’s important to weigh all the factors, so here’s a look at what you need to think about when weighing new and used.

Cost and depreciation

It’s a fact that you’re going to pay more for a new car compared to a used car. But one thing you also need to consider is depreciation—the amount that the value of your car will decrease over time.

In fact, it’s estimated that new cars lose about 20 percent of their value within the first year of ownership.

If you’re only intending to drive this new car until you pay off the loan, you’re likely going to be losing money in the long run due to depreciation. You’ll realize this when it’s time to sell it or trade it in for another vehicle. However, if you plan on driving it for 8-10 years, the depreciation factor isn’t going to matter as much to you, nor will it play as big of—if any—role in your initial decision.

Conversely, when factoring in depreciation, you’ll be able to buy a used car—even if it’s just a year or so old—for a much lower sticker price. No, it’s not the same as driving a brand-new vehicle, but paying 20 percent or more less for a vehicle that’s only a year or two old can make sense for a lot of consumers.

This cost savings associated with used buying can also help consumers acquire a nicer model or different style compared to what they’d be able to afford to buy brand new.

Warranty

One of the big benefits to buying a new car is the bumper-to-bumper warranty that manufacturers offer.

Every Chevrolet, for example, comes with a comprehensive 3-year/60,000 km warranty that covers repairs on your entire vehicle, including parts and labour, to correct problems in materials and workmanship. There’s also a 5-year/160,000 km warranty on select powertrain components.

These can translate to several years of worry-free driving for you.

Granted, these warranties may also transfer to any new owners—should the vehicle still be within the kilometers and term limits of the initial warranty—but if you buy used there’s no denying you won’t be able to take as much advantage of any warranty as you would if you purchased new.

Total cost of ownership

Buying new vs. buying used typically comes down to cost—but you shouldn’t think about it just in terms of sticker price and monthly payments. No, the total cost of vehicle ownership should also be considered.

For instance, new cars typically require less maintenance and fewer repairs, especially when you factor in manufacturer warranties.

Used cars, on the other hand, are more likely to need the likes of new tires, brakes, batteries, alternators and other components sooner. These components aren’t typically covered by manufacturer’s warranties.

New cars also typically come with better interest rates when financing—not to mention buying incentives that you may qualify for.

However, when it comes to used car buying, you’ll likely save money on annual registration renewal fees and car insurance rates. What’s more is that many reputable auto dealerships put any used vehicles they have up for sale through a rigorous inspection and reconditioning process to give consumers more peace of mind with any purchase.

Summing up

So, what’s best for your situation—new or used? Regardless of your decision, one additional factor to consider is who you buy the vehicle from.

On that note, it’s important to choose a reputable, trustworthy dealer like Budds’ to help ensure that you’re making the right purchase for your particular situation.

Like we said above, there’s no right or wrong answer to the used vs. new conundrum—just what works best for an individual’s situation. And Budds’ can definitely help you talk that out.