New vs. Used Vehicles, the Age-Old Debate
“Should I buy new or used?”
Buying a vehicle is generally the second largest purchase someone will make in their lifetime, only second to purchasing a home. It can be a daunting task for anyone and for any budget. There are endless brands, models, trims, and segments to choose from and it can be an overwhelming experience. A common question we get asked at Clutch is “Should I buy new or used?” There are certainly advantages and disadvantages to both sides of the argument, however, we believe there is a clear winner!
New is shiny... but so is used
For most buyers purchasing a new vehicle tends to be more of an emotional decision than a logical one, which is just how most people are wired when they shop. Purchasing new gets you the latest and greatest and is for those people who just can’t wait for “the next best thing.” Of course, it also offers a brand new warranty, lower interest rates (sometimes), and the comfort that you’re the first one to own and drive the vehicle. However, is this really a good reason to purchase new?
Used = Lemon? That’s a misconception
There are a lot of misconceptions and bad information floating around about buying a used vehicle. The largest point is that you are somehow inheriting someone else's lemon or that the vehicle is going to be of lesser quality. This is simply not true, as long as you’re buying from a reputable company that has provided a CarFax report, their own inspection, and has remaining factory warranty, your concerns should be minimal.
Driving a new car off the lot depreciates a whole lot
Put it this way, is it really a smart idea to purchase a brand new 2019 vehicle at full retail, when you can purchase a used version of the same year or say, a 2018, with 10,000-20,000km on it? The second you drive off a new car lot, your vehicle has lost 10% of its value and according to current depreciation rates, the value of a new vehicle can drop by more than 20% after the first 12 months of ownership!
Moreover, the effect of losing 10,000 km on your warranty is negligible, heck, you can purchase an extended warranty for around $1500-$2000 that will be double the length of the ‘new car warranty’ and you will still come out with thousands of dollars ahead, plus a better warranty! Let someone else’s depreciating asset become your best asset when you purchase it a year later.
Used is a no-brainer for cash buyers
Buying a used vehicle should be a no-brainer for the cash buyer. Without interest rates and loan terms involved, there is almost no reason for a cash buyer to purchase new, besides that new car smell. The savings will be massive, especially if you are buying a demo or a slightly used vehicle of the same model year.
Buying used will keep you in the green
The final thing to keep in mind is that although most people tend to take vehicles over long loan periods of 72-84 months – especially on new vehicles with low-interest rates – the vast majority of people end up trading their vehicles in for a different model within three to four years after purchase. (This is from my personal experience in the auto industry.) Again, the advantage of buying used here is clear: you will owe less, and have a much lower depreciation rate, meaning you will be better off financially when you go to trade.
Only buy used from a reliable source
Since this a blog post for Clutch, we would be crazy not to tell you why buying a used vehicle through us is even a smarter choice! We eliminate a lot of the fear of buying used by providing a free 3-month 3000 km warranty with all our vehicles, a full 7-day return policy, a rigorous 210-point inspection report, and a free CarFax so you can see the entire history of the vehicle before buying!
We believe buying used is the best way to go in most situations, but whether you’re buying new or used always do your diligence, gather all the information you can, make sure the vehicle is inspected, and ALWAYS demand a CarFax report. At the end of the day, purchase something that puts a smile on your face every time you start the engine!