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The Pros and Cons of Buying a New Car

January 20, 2022 | Vehicle Financing

Buying a car is a big undertaking. Sure, it’s fun to think about being behind the wheel of a new car, but is “new” always the right choice? There are pros and cons of buying a new car that you will have to consider before choosing the route that is right for you.

Buying a used car or buying a new one is an important decision. In this guide, we’ll take a quick look at the pros and cons of buying a new car to help you make a wise purchase.

The Pros of Buying a New Car

Evaluating the perks of buying a new car is an important part of deciding if a brand new vehicle is right for you. Take a look at the benefits of buying a new car below.

Warranty

One of the top benefits of buying a new car is that your vehicle will be covered under the manufacturer’s warranty for a good amount of time, typically 36 months or 60,000 miles. Extended warranty coverage can also be purchased from the dealer and, most of the time, regular maintenance services and oil changes are included as part of a warranty package.

Lower Loan Rates

Did you know that interest rates for new vehicle purchases are often lower than rates for used cars? It’s surprising, but it’s true. The reason for this is that lenders view used cars as riskier investments, with a difficult to determine value. As long as you have good credit, you stand to get a pretty good rate for a new vehicle purchase.

Less Need for Repairs

With a new vehicle, unless there is a major manufacturing defect, you shouldn’t encounter any significant problems with the car for years to come. With used cars, no matter how thoroughly you inspect the car before buying, you could be looking at repairs soon after purchase.

Mint Condition

In addition to saving money on repairs, many people simply enjoy being the first owner of a car that hasn’t been driven (and possibly stained, dinged, or scratched up). Purchasing a brand new vehicle ensures that the car arrives in mint condition, and you can make sure it stays that way.

Latest Features

The reason why many people choose to buy a new car in the first place is to gain access to all the fun and exciting new features of the most recent model. Technology changes constantly, and consumers can benefit from all the safety, navigation, entertainment, and accessibility features that drop with each new model year.

The Cons of Buying a New Car

There are also a few downsides to buying a new vehicle that you will need to keep in mind. For many consumers, buying a used car makes better financial and practical sense. Before making a decision, consider the cons of buying a new car below.

Depreciation

Depreciation. It is one of the strongest and most commonly cited arguments against buying a new car.

Believe it or not, your vehicle loses value the moment you drive it off the lot. If you tend to change cars often or balk at the idea of potentially being upside down in your auto loan, you may be better off buying a certified pre-owned vehicle that has already depreciated while it was with its previous owner.

Higher Insurance Premiums

The newer the car, the higher the insurance premiums. There’s just no getting around that.

And, in case you’re ever in an accident, you’ll need what is known as gap insurance. Gap insurance covers the difference between the purchase price and the vehicle’s current value. While gap insurance is helpful, it does raise your insurance premiums even more.

Last but not least, if you are financing your vehicle, you will be required to have full coverage insurance until the vehicle is paid off, which will take a lot longer with a new car than with a used one.

Higher Annual Registration

Car insurance isn’t the only thing you’ll end up paying more for if you purchase a brand new vehicle. When you head down to your local DMV, you’ll have to pay higher annual registration fees each year for that shiny new car. Annual registration costs are highest during the first three years before leveling off — and can cost you hundreds in additional fees each year.

More Hidden Fees

New cars often come with a long list of charges and fees. With a used car, you don’t have the additional cost of dealer add-ons and vehicle customization packages. What you see is what you get.

Dealership Hassles

Some people just don’t like the hassle of buying a car from a dealership. For new cars, it’s hard to get around that. But for used cars, you can opt to buy from a private party, which may get you a better deal though you have to make sure to do your due diligence.

Pros and Cons of Buying a New Car: How to Make the Right Choice

In the end, the decision to purchase a new or used car is a personal one determined by your individual needs.

But that doesn’t mean you can’t have a little help. Making an educated decision is the most important step to ensuring you wind up with a wise investment. And Red River Credit Union is here to assist, including providing financing options only available through a credit union.

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