Disclaimer: This post is sponsored by PSECU, a Pennsylvania-based credit union.
When looking for a car, you want to find one that will fit all your needs. Whether that means having ample seating or fitting within your budget, it’s best to know all your options before rushing into a big purchase. To better understand what will work best for you, look at the pros and cons of buying a used car.
The Cons of Buying a Used Car
Let’s start with the possible negatives you could face if you buy a used car.
- You Could Get a Lemon
Buying a used car always comes with the risk of getting a lemon, a vehicle with severe manufacturing defects. It’s estimated one percent of new cars — around 150,000 vehicles each year — are lemons. To prevent buying one of these money-sinks, always seek out reputable sellers. If possible, bring along a trusted mechanic who can check for any issues before you buy. - You Won’t Have the Latest Tech
New cars have all the coolest gadgets, like hands-free parallel parking and voice-activated stereo controls. When you buy used, you might have to compromise with semi-outdated technology. You can still find used models with convenient features such as Bluetooth, GPS and backup sensors. - You’ll Have Higher Interest Rates
If you need to take out a loan on your car purchase, it’s important to know that loans on used cars have higher interest rates compared to those on new cars. This is because used cars are more difficult to appraise and, in the event you would default on your loan, the lender would get less money for the resale of your vehicle.
The Pros of Buying a Used Car
While buying a used car comes with its challenges, there are also plenty of benefits.
- You Don’t Need a Loan
The interest rate on a car loan can range from 3 to 10 percent, depending on your credit history and the vehicle you choose. But you can easily save hundreds of dollars by forgoing the loan payments and instead purchase a car outright. Many used cars come with reasonable price tags making it realistic to save up your money before you spend. - You Can Save Money
A new car loses 10 percent of its value just one month after you’ve driven it off the lot. Why pay the steep price for a new car when you can get a deal on a used car that’s just a couple years old? At a used car dealership, you can also negotiate on price and financing. According to experts, the best time to buy a car is during end-of-year sales when dealerships are clearing lots to bring in new models. - You’ll Pay Less for Insurance
If you want to save money on your car purchase, don’t forget to factor in insurance. New cars, especially sporty models, often come with steep insurance payments. With a used car, however, your car insurance will be much cheaper. This is because, in the event of an accident, an older model car will be cheaper to fix or replace.
Planning to Buy a Car?
You may be having difficulty deciding whether to buy new or used on your next car purchase. While buying new means getting to choose all your desired features, the compromise of buying used can be a great way to save money.
Remember, used models come with a few more risks you should be aware of before buying. Consider all of your
options before deciding what’s best for you.
