Contents

Know more about this
(or any other) subject?

Show off your know-how at Quamut Wiki.

Learn more with these titles from Barnes & Noble

Smart Buyer's Guide to Buying or Leasing A Car

Previous:
Is It Time to Buy a Car?

Next:
Should You Buy or Lease a Car?

Should You Buy New or Used?

One of the first decisions you have to make when buying a car is whether you want to buy a new car or a used car (which the auto industry calls a pre-owned car).

Pros and Cons of New and Pre-Owned Cars

The following table lists the factors to consider when deciding whether to get a new or pre-owned car.

Factor		New Cars vs. Pre-Owned Cars
Ownership costs		Pre-owned cars have considerably lower purchase prices, dealer fees, licensing and registration fees, insurance costs, and taxes.
Operating costs		New cars tend to have lower operating costs due to better mileage and less frequent maintenance and repairs. Older pre-owned cars may require costly updates in order to comply with current emissions- related regulations.
Reliability		New cars tend to be more reliable. A pre-owned car may have a history of problems, neglect, and/or lack of proper maintenance or repairs that you won’t know about when you buy it. Plus, pre-owned cars are more likely to “die” or develop unfixable problems than new cars. But new cars are sometimes prone to problems too, such as manufacturer recalls or design defects.
Warranty		Most new cars come with at least a three-year, 36,000-mile warranty as part of the purchase price. Some pre-owned cars come with an extended warranty from the manufacturer, but often you need to pay additional money beyond the purchase price to get that warranty.
Safety		New cars have the most current safety features, such as airbags and antilock brakes. Pre-owned cars may lack these features entirely or have older, less effective systems.
Depreciation		New cars depreciate in value much faster than pre-owned cars do.
Environmental impact		For the most part, new cars release fewer harmful emissions than older cars do.

Certified Pre-Owned

Certified pre-owned (CPO) cars are a middle ground between new and pre-owned cars. CPOs are used cars that come with a dealer’s stamp of approval. Dealers typically guarantee the car’s performance and back up their claims with an extended warranty of 3–5 years or more. CPOs help consumers feel more secure about buying used cars and let dealers charge higher prices for their used-car inventory. Most CPOs cost less than their new-car equivalents but considerably more than used cars without dealer certification.

The Bottom Line: New or Pre-Owned?

The decision of whether to buy new or used depends primarily on your financial situation:

If money is not a factor: Buying new is likely the best strategy. You get the security of all the latest safety features and the confidence that your car will have a long life and not need major repairs for many years.
If money is a factor: Buying a pre-owned car certainly saves you money, at least in the short run. If the risks and uncertainty involved in buying a used car make you anxious, though, consider buying a CPO car. Nearly all major automakers offer CPOs these days, and buying one is a great way to get the security and reliability of a new car with significant cost savings.

Acknowledgments & Disclaimer