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If you're considering buying a car, you may be debating whether to buy a brand new car or a used one. Here are some of the advantages and disadvantages of buying a new vs. a used car.
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 and maintained. That means after 5 years the car cost $14,000 to own, plus lower insurance and maintenance costs when compared to a brand new vehicle due to after-market car part prices being lower.
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.