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If you’re in the market for a new car, one of the first decisions you have to make is whether to buy new or used. A pre-owned vehicle can save you money, but a new car can also bring prestige and features not available in older models. 

Depreciation
The main reason to consider a used car is depreciation. Vehicles lose value over time. Cars depreciate quickly soon after they are sold and at a slower rate later on. If you buy a used car, the first owner will bear most of the depreciation and you will lose a smaller chunk of your investment over time. 

This is not true across the board, however. Some makes and models are known for holding their value better than others.

Affordability
Used cars often cost less than new ones, but the advertised price for a new car is not necessarily the price you will pay. You might qualify for rebates and a low interest rate on a new car. If you have your eye on a luxury vehicle and you cannot afford a new one, a model that is a few years older might better fit your budget.

Interest rates for new cars are generally lower than rates for used vehicles. With a new car, a lender knows the value of the collateral, but it’s harder to determine the value of a used car. People who buy new cars are also more likely to pay off their loans than buyers of used cars. 

Insurance
If you buy a new car, lenders require you to carry comprehensive and collision coverage, as well as gap insurance to pay off the difference between the car’s value and the amount you owe if it gets totaled or stolen. Your comprehensive and collision insurance rates will be lower for a used car than for a new vehicle because a used car is worth less. You can decide not to carry comprehensive or collision coverage at all. 

Reliability
A new car should be free of defects and wear and tear. If a problem arises, the warranty should cover it. 

If you buy a used car that has been well maintained, and if you continue to take care of it, it can last for several years. There is no guarantee that the previous owner took care of it, however, which is why you should have an independent mechanic inspect a used car before you buy it, unless it’s a certified pre-owned vehicle.

Technology and Other Features
New vehicles are often more fuel efficient and have safety and comfort features that older models lack. A car that is just a few years old will most likely have outdated technology. The downside of technology in new cars is that it can lead to higher repair bills after the warranty expires.

If you buy a new car, you can request the color and features you want. If you buy used, on the other hand, you will have to choose from whatever is available.

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