Should You Buy a New or Used Car? | Banking & Finance > Personal Finance from AllBusiness.com
Facebook Twitter Google+ You Tube RSS Feed

Should You Buy a New or Used Car?

More

There are two car-buying options: new or used. As the cost of a new car continues to rise, many car buyers are opting for quality used cars. Car manufacturers are fighting back with incentives including low interest payment plans, rebates and other means of attracting new car buyers. The Internet, meanwhile, has made it much easier than ever to locate new car incentives and used car savings. Either way, the choice typically comes down to:

Why you are buying the car: Often, a second or third car, perhaps one for your son or daughter, will be a used car.

How much you can afford: Used cars cost significantly less than new cars (even with rebates). There are greater risks involved, however.

Whether a car is a status symbol: For some people a car is a sign of stature, while for others it is simply a means of getting around.

Typically, if you can put some money down on a new car without dipping into your investments or putting a dent in your budget and can pay off the car in three or four years with monthly payments, then a new car is a possibility. Of course, you have to consider your insurance payments and the regular costs of maintaining a car.

An advantage of a new car is that you will be under warranty for a period of time. Before buying, you want to shop around for a lender, find out the APR (annual percentage rate — or interest rate for the loan and the terms) and watch for the best deals. Often there are better deals offered on new cars as the fall approaches and the following year’s new models role in.

Also, keep your eye on used fleet cars, which can be a good option since a car or limo service keeps vehicles in good condition with ongoing maintenance — and they have to sell them off on a regular basis.

Used cars are a little trickier. There are numerous places to look, including local ads, major used car dealers and online sites devoted to finding cars. The trick is evaluating the condition of the car and determining whether you are getting a fair deal or overpaying. If you know a mechanic, you should ask him to check out the car for you.

There are a few things to look for when buying a used car:

  • How old is the car? More than six years can be questionable unless the mileage is low.
  • How old are the parts in the car? Has it been well-maintained? Have parts been replaced?
  • Does the paint feel smooth or is it covering rust or dents?
  • Can you get the paperwork that should come with the vehicle?

Check the car’s history. CarFax can provide the accident history of the car, any odometer rollbacks, and so on.

There are many things to check when buying a used car, including the reputation of the dealer. For more on checking the car, check out Samarin's.com, which provides specific details regarding what else you should look at.

Remember, you can negotiate. In fact, haggling is almost a given when you are buying a used car.

Newsletter

Weekly Roundup

Sign up for our weekly Experts roundup, delivered to your inbox each Saturday morning.

Most Recent From our Experts

AllBusiness Experts
;
Close

Real Business Owners, Real Business Advice!

Sign up for practical, real-world solutions from successful business owners delivered to your inbox each Saturday morning. FREE.