Buying a New or Used Car

Every year in the United States, 41 million used cars are sold compared to 16 million new cars. In deciding whether to buy a new or used car, you need to consider many factors:

• In a late-model car, the price is cheaper for a used car than for a new one.
• Taxes are often lower for used cars than new cars.
• Insurance is usually lower for a used car than for a new version of the same vehicle.
• New cars depreciate faster than used cars, although the amount of depreciation depends on the model of the car.
• New cars usually have fewer problems than used cars in the first few years of ownership.
• The warranty is longer for a new car than for a used car. Used car dealers may provide a warranty, but it lasts for a shorter period of time than a warranty for a new car.
• With new cars you can get the newest equipment that you want. Sometimes when you buy a used car, you have to decide whether you will be satisfied with compromises about having a vehicle that doesn’t have every piece of equipment that you desire.
• You cannot be sure about the quality of a used car. A used car may have a good appearance, but the previous owner may not have maintained the car properly and components of the car may be in need of costly repair.
• Loans for new cars usually have a lower interest rate than loans for used cars, although the difference may not be extraordinary.
• Most dealers who sell used cars offer shorter terms for repayment of loans than they do for new cars.