Unless you live in a city with reliable public transportation, you probably need a car, whether it’s to commute to work or get around town to run errands. And if you’re in the market for a vehicle, you may be thinking of getting a used car rather than springing for a new one. Here are a few benefits and drawbacks of this route.
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Pro: You’ll spend less
Generally, you spend less to purchase a used car than a new one. You may not have to put down as much money, and you’ll enjoy lower auto loan payments, which could give you more wiggle room in your budget.
Pro: You could save money on auto insurance
Buying a used car can mean paying less for auto insurance. One of the factors insurance companies take into account when determining your premium rates is the cost of replacing your vehicle. Since a used car is worth less than a new car, its replacement cost is also less.
Pro: You might get great resale value if you sell your car
New cars lose a large chunk of their value the moment they’re driven off the lot. On the other hand, if you purchase a used car and decide a year or two later you don’t need it (say, you move to a city where you can rely on buses, trains, and bikes), you may be able to sell at roughly the same price you paid, if you keep the car in good condition and don’t tack on a lot of mileage.
Con: Your car may have issues
When you buy used, it can be difficult to know exactly what you’re getting. A car may have been in an accident, and hidden issues may lurk. And while doing your research with services like CARFAX could help you uncover problems, there’s still an underlying risk.
Con: You forego a warranty
When you buy a new car, a warranty protects you from major repair issues for a preset time. New cars frequently have a three-year or 36,000-mile manufacturer’s warranty, and it’s often possible to extend that warranty at a modest cost. With a used car, you don’t get that same protection — if a major issue arises, it’s on you to fork over repair costs.
Con: You may not save much on insurance
If you buy a car that’s not in the best shape or doesn’t have newer safety features, you may not snag the car insurance discount you might expect.
What’s the right call for you?
Some people need the peace of mind of buying a new car, and it could be worth the extra cost. But it pays to consider the benefits of buying used instead. You may find that doing so makes your expenses easier to handle, and that’s worth more than the perks of a brand new vehicle.
View more information: https://www.fool.com/the-ascent/insurance/auto/articles/3-pros-and-cons-of-buying-a-used-car/