Car Buying: New or used?

Nationwide provided me with information regarding its In The Nation blog post.

Should you buy a car used or new?   Becky and I are looking at buying a truck, because with four kids we are always hauling something somewhere… bikes on vacation, wood to build new bookshelves or wall beds, etc….  There are pros and cons to buying both new and used…

New: When buying new, you get the full manufacturer’s warranty and you know the car has not been abused. You can also usually get the color and options you want. There should be no repairs that cost you money and maintenance should be minimal. The biggest con is that the bulk of the depreciation occurs in the first couple of years and this can be substantial for some models.

If you want a new car but want to save money- don’t rule out the base model. You can save thousands this way because many of the “extra bells and whistles” add substantially to the cost but often return little or nothing at trade in time. Most every model today comes with air conditioning, am/fm/cd and even electric windows and locks. Base models today are what used to be considered as “loaded”. Get a manual transmission (stick or straight drive) if you know how to drive one (it’s easier than you think and much more fun in our opinion!).This will normally save you at least a thousand dollars because many people cannot drive a manual and they rely on automatics to go anywhere. If you can be a person that comes into the dealership and is able to drive a manual- you’ve just added purchasing power to YOUR side! Many dealers will stock a manual transmission model as a low cost price leader- a marketing tool to get you in the door- then persuade you to go for the automatic once you are there, usually adding substantially to your purchase. Not exactly bait and switch but close. They stock more of the loaded models because the profit margin is higher.

Used: When buying used, the cost can be significantly less. Also, there may be little difference in features, performance, or appearance of new and used. The cons may be that there will likely be some wear and tear, and a warranty will be less or may not be in effect.

Also, you may not get the combination of options and features that you hoped for. When we knew that we needed a new van, we didn’t want to have a car payment, so we used some of our money in our savings account to pay for a new-to-us (used) van. We didn’t have to worry about a monthly payment and we found a used van with relatively low miles that we knew we could afford to pay for with cash.

A good option would be to purchase a low-mileage used car. We did this and we paid cash for it. It wasn’t the van that we dreamed of, but it is safe and it works. In the end, after a week of driving a used car or a brand new car, they are both now “used”.

Many of the rental companies will sell their rental cars, often with only 20,000 miles or less on them, and you may be able to save $10,000 or more over new. Some even take trade-ins. If you go this route, print and take this checklist with you if buying used: Used Car Inspection Checklist. To make this decision on how much you have to spend and deciding which way you want to go, check out these tips from In The Nation

Finance – Use the tools below to learn about financing options. Then, get pre-approved for an auto loan online, so you know what type of car you can afford to simplify the research phase.

• Estimate your monthly payment or purchase price: Auto Payment Calculator
• Compare low-interest financing with a manufacturer rebate: Auto Rebates & Financing Calculator
• Get instant pre-approval for an auto loan: Auto Loan Application
• First-Time Car Buyer Guide: Tools and Resources