Looking for a different set of wheels? The biggest question is often: new or used? While both ways have their plus side, there are often a few negatives. Here are some things to consider while shopping.
Pro: “It’s a new car!” There is a reason Oprah’s audience would freak out when she was giving away new rides. A brand new car straight off the lot with paper tags will drive great, look perfect, and tell the world that you are doing alright financially. Even if that last part is a lie. New cars are usually defect-free, years and thousands of miles of warranty left, and will require little to no maintenance in that time. Depending on the manufacturer and dealership, they will try and earn your loyalty with free incentives like complimentary oil changes, or even tires, for as long as you own the vehicle. They will try hard to make you happy, and usually they succeed.
Con: Everything is great until that first payment comes due. Then you realize you are going to be making that several hundred dollar payment every month for the next five or so years. Ouch. Also, by the time your first payment is due, your shiny new vehicle has likely depreciated 20%. If you are buying the first of a new generation, or the first year of a new model, there could be a few gremlins that the factory had not found yet. For example, the first year of the fifth generation Corvette had oil consumption issues that were not discovered until the car was in the hands of owners. They were fixed under warranty, but it was still annoying for owners. And then there’s that new car smell, which is actually adhesives off-gassing toxic substances. Yes, your new car is trying to kill you.
Pro: Sweet! $500 for a running car on Craigslist. For not much of your monthly pay, you can outright buy a vehicle and have no payments. Granted, there is the rule of diminishing returns here. Basically, the cheaper the vehicle, the older and higher mileage it will be. Still, take a look at the two or three year old vehicles. If there is a known issue, say oil consumption or ignition failures, the previous owner has most likely had it taken care of before the sale. Basically every manufacturer was making quality vehicles in 2012, so you can’t really lose. Plus, a lot of these few-year-old cars are still new mechanically and in looks, but are 30 or 40 percent off of new prices. Let some other sucker take the massive depreciation hit.
Used: Gross. That $500 car on Craigslist is 30 years old, barely runs, and smells like a truck stop bathroom. Alright, that’s an exaggeration, but there is sometimes a reason buying used is called “buying someone else’s problems.” Used cars could have very limited, or no, warranty left. If that’s the case, you could be on your own, and out of pocket, for all repairs and maintenance. An unscrupulous seller might have discovered a slipping transmission, and is trying to cash out before it blows.
Essentially, the question of new or used depends on your financial picture, and how much your peace of mind is worth. There is certainly no harm in stretching the budget for a new ride if it makes you happy, and no shame in buying used if you are a savvy shopper.