Explore the pros and cons, costs, and considerations in deciding between a new car or a more affordable used one.
6 minutes
12.07.2023
Choosing the right car isn't easy. There are so many models to choose from, and on top of that, you’ll need to decide if you want a new or used one.
Once you drive a new car out of the dealership’s lot, the car depreciates. So is a new car even worth it? Is the car going to be too expensive for the miles you'll drive? Do you really need a car if you're only doing short trips every day?
If you're unsure about buying a new or used car, why not consider a car subscription from FINN? With a FINN car subscription, you can access the latest vehicles with a monthly payment that also covers insurance, registration, and roadside assistance. You also have the flexibility to upgrade or change your car after six to 12 months.
Buying a new car has its perks, like having the latest safety features and technology and being covered by a factory warranty for potential repairs. But a used car is generally more affordable and has slower depreciation, making it a smarter financial choice. Take a look at the following comparison to understand the costs between new and used cars better.
Factors | New Car | Used Car |
Purchase price | More expensive because they come with the latest features and technology. | Typically, less expensive; price depends on the age, mileage, condition, and model. |
Deprecation | Faster deprecation; can lose up to 20% of its value in the first year. | Slower deprecation; much of the deprecation already happened. |
Maintenance and repairs | Usually comes with a warranty that covers most repairs for a certain period. Maintenance costs are typically lower in the first few years. | May require more frequent maintenance and repairs, especially if they’re older/have a high mileage. However, some might still be under warrant. |
Insurance costs | Tends to be more expensive because they’re worth more. | Usually cheaper because they’re worth less. |
Financing | Usually lower. | Often higher, however, since the overall price is lower, monthly payments could be less. |
While used cars offer more affordability, purchasing a brand-new vehicle comes with some compelling benefits:
While buying a new car has its allure, there are also some downsides to consider before making this large investment:
While used vehicles come with more risks and uncertainties, they offer compelling benefits that attract many savvy car shoppers:
Even though a used car is typically cheaper than buying a new one, it may have some significant drawbacks.
In many ways, certified pre-owned (CPO) cars split the difference between the pros and cons of buying new versus old car. For buyers wanting used car cost savings but the added confidence of inspected quality and manufacturer assurances, certified pre-owned vehicles hit a nice middle ground. There are some key benefits and drawbacks of certified pre-owned (CPO) cars that you should know about:
Deciding between buying a new or used car ultimately comes down to your budget, priorities, and personal situation. There are good arguments to be made for both options:
Buying new makes sense if...
Buying used makes sense if...
For many buyers, the budget reality means there may only be one viable option between new or used. But for those that can go either way, focus on test drives, calculating total long-term costs, and analyzing your needs. Get pre-approvals for financing and check insurance rate differences too.
If you've been car shopping lately, you may have noticed that used car prices seem to be soaring. It's not just your imagination; there are several factors at play here.
One reason has been the global pandemic, which caused significant disruptions to supply chains. Because of that, it's harder for automakers to manufacture new cars, leading to a decreased supply of both new and used vehicles.
Because of inflation, leading to a higher cost of living, there's been an increased demand for used cars. With fewer new models being produced — particularly affordable ones — more buyers have been flocking to used-car lots. This combination of high demand and low supply has resulted in higher prices. It's the basic principle of economics: when demand outpaces supply, prices go up.
Another reason is the upward trend of new car prices. Manufacturers have been gradually increasing the prices of new cars, which in turn has led to an increase in used car prices. Since the onset of the pandemic, automobiles have experienced altered depreciation rates. Used cars now hold more positive equity than usual, contributing to their high costs.
So, when will this situation improve? It's difficult to predict, as it depends on multiple factors, including the resolution of supply chain issues, changes in consumer demand, and more. For more insights on this topic, check out this article.
If you want to buy a used car, it's important to ask the right questions:
Timing is everything. There are certain times of the year, month, and even week when you might be able to secure a better deal:
Keep in mind that while these are general guidelines, the “best” time to buy a car can also depend on your personal circumstances, such as your budget and the specific car you're interested in.
Deciding between a new or used car is more than just crunching numbers. Sure, new cars have shiny tech and less initial maintenance, but they lose value fast. Used cars? They're wallet-friendly, don't depreciate as much, but may demand more TLC. Certified pre-owned cars? They can be the best of both worlds. Weigh in both sides when planning your car buying budget, what features you can't live without, and potential upkeep costs.
If you’re someone who wants all the latest safety features, car models, and tech – perhaps consider a car subscription instead. With a FINN car subscription, you can get access to all the latest vehicles with a simple monthly payment that covers the cost of the car, as well as insurance rates, registration, and roadside assistance. FINN also allows you to upgrade or change your car more frequently, with typical subscriptions lasting between six and 12 months – so you aren’t stuck with the same vehicle for multiple years.
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