New Car - Advantages: - New car smell - Comes with warranty - Financing is easily available - Latest technology (better gas mileage, lower emissions, improved safety standards, etc.)
New Car - Disadvantages: - Expensive - Lose almost 50% of it's resale value in the first 3 years - Brand new car models (models in their first year of production) may have unknown problems that aren't discovered until years later - Regular maintenance costs are more expensive under warranty
Used Car - Advantages: - Much cheaper and higher resale value compared to it's purchase price - Consumer Reports can give you an idea of the cars reliability - Lower insurance rates (depending on the model)
Used Car - Disadvantages: - Requires more work (and patience) looking for the right car - Need to pay cash up front (or take a bank loan) - Depending on the age, the car may need repairs more often or may have large upcoming repairs that need to be done - always make sure you have a mechanic you trust inspect a used car that you are interested in buying
While the final decision may ultimately be financial, it is important to remember that buying a car is not an investment. Let's look at the numbers.
Let's first look at buying a brand new car for roughly $32,000 (taxes included). After financing the car will end up costing you around $37,000 when it's paid for 5 years later and it's resale value will be around $13,000 or less, depending on the make, model, and condition it's in. That means after 5 years the car cost $24,000 to own (plus higher maintenance and insurance costs when compared to a used vehicle).
Now let's look at buying a 5 year old car that's in good shape for around $13,000 (taxes included) - slightly more if you are financing. After 5 years it's resale value would be around $5,000. Considering it's an older vehicle, you will probably need to do some additional repairs which may cost you about $6,000 depending on the make, model and how the car is driven/taken care of. That means after 5 years the car cost $14,000 to own (plus lower maintenance and insurance costs when compared to a brand new vehicle).
In the end, it all depends on your preference, finances, and how long you plan on keeping the car. Our recommendation is to save up and buy a reliable, slightly used car with cash instead of the shiny brand new model that you have to borrow money for. If you have questions, contact us and we'll advise what is best in your situation.