Purchasing a brand new model or a pre-owned vehicle in has its pros and cons. That being said, let’s take a closer look at the pros and cons of owning one versus the other.
Pros Of A New Car
Quality Assurance and Warranty Coverage
One of the many advantages of a new vehicle is the assurance of buying a vehicle that is in excellent condition. You are 100 percent assured by your dealer that your brand new car won’t have any mechanical issues and will certainly give you the satisfaction that you seek in a car. You will most likely enjoy a couple of years without any serious engine trouble, provided you take good care of your vehicle.
In addition to quality assurance, the manufacturer’s warranty coverage ensures you that any mechanical problems will be covered by the warranty. Most dealerships have a warranty that covers 3 years or 36,000 miles, others can extend it up to 5 years or 100,000 miles.
Updated Technology and Features
With the ever changing trend in technology, the current breed of cars certainly revolutionized the whole driving experience. Rear camera, blind spot sensors, and even self-driving vehicles are now up for grabs. With a new car, you are likely to enjoy the perks of such innovative features.
Cons Of A New Car
As soon as you drive it off the dealer’s lot, your new car’s value will immediately depreciate by as much as 20 percent. This is why you should think twice when choosing to buy a new car. If you don’t make a large down payment, you will definitely accumulate a lot of negative equity during the first 3 years of car ownership. Negative Equity occurs when the market value of an asset used to secure a loan falls below the outstanding balance on the loan. Having one in car loan is bad news any day of the week because it means that you owe more on your loan that your car is worth.
Expensive Car Insurance & Sales Tax
Acquiring a car insurance for a new car is much more expensive than getting one for an old vehicle since the former’s insurance coverage is also higher. Meaning, if something happens to your car, your insurance company will spend more since it is a brand new model. Moreover, the sales tax involved is also more expensive since it is primarily calculated based on the car’s value.
Pros Of A Used Vehicle
Lower Purchase Price
Needless to say, pre-owned vehicles in are more affordable than brand new ones. Buying one keeps you from suffering too much on initial depreciation, giving you equity over your purchase. For instance, since the value of a 1 year old used car has already depreciated by roughly 20 percent, you can easily negotiate for a price that is equal to its current value. In addition, your car insurance quote is much lesser than a new vehicle. If you are on a tight budget, a reliable used vehicle is indeed a good option.
Buying a used car doesn’t necessarily mean sacrificing quality. Certified pre-owned vehicles are offered by manufacturers and independent authorities to car buyers who want to make sure that that although used, the cars they buy have been inspected, refurbished, and certified to pass performance requirements. CPO vehicles are at most five years old and have less than 80,000 mileage. They usually include extended warranties, special financing, and additional benefits. Mercedes-Benz, Lexus, and Mazda are some of the few car makers that offer them.
Cons Of A Used Vehicle
There is always a higher chance that your newly purchased pre-owned car will manifest mechanical issues any time soon. So, if you’re seriously considering getting one, make sure to check its service history to understand its overall condition. The last thing you want is to incur more expenses on repairs because its defeats the whole purpose of buying a used car which is to save extra money.
Higher Annual Percentage Rate
If you want to acquire financing for a used car, expect to pay a higher interest rate. Rates may vary depending on the lender but it will certainly be more expensive because it entails greater risk for the lender.
Cars are expensive commodities so always weigh your options carefully and do thorough research before committing to purchase one through a loan. If you are looking for someone to finance your next car purchase, New Car Canada can give you the cheapest auto loan option available. We approve anyone regardless of their credit situation, as long as you have a stable job and a regular income of +$1,800 per month. Just fill out our FREE 1-minute online application form and get approved instantly!
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