Paycheck Chronicles

New Or Used Car? 5 Factors To Consider

Experience is a powerful influence.

And it certainly plays a central role in my decision-making when faced with the choice of a new car versus a pre-owned alternative.

I admit, I can tell some tales of woe about used cars. I bought a couple that spent more time in the shop than on the road, and I once owned another that had been in an accident the seller didn’t disclose.

However, if I put those experiences out of my mind and remain objective, I can make a case for either side of the new or used decision.

Here are a few considerations that should factor in as you weigh your options:

Used Means A Lower Purchase Price

Opt for a slightly older version of the model you’re interested in, and it can yield thousands in savings. That’s money you can use in a lot of other ways.

Depreciation Is A Major Short-Term Factor

According to, a car, on average, loses 11% of its value the moment you leave the lot and roughly 15% to 25% in each of the first five years of ownership. Every car is different, but letting someone else absorb that initial hit may make a lot of sense. Learning the value of your car when you try to sell or trade it in after a year or two can be an eye opener. However, the longer you own a car, the less this factors into the new or used choice.

Financing Favors The New

Whether you’re looking at bank or credit union interest rates or checking out sweet manufacturer financing deals, cash incentives or rebates, a new car typically gets the more favorable financing. Of course, that’s not an issue if you’re a cash buyer.

You Want The Latest And Greatest

Whether you are concerned about safety and security, improved gas mileage or reduced emissions, newer generally means better. The features available on today’s mid-level models were limited to high-end offerings a few years ago, and government regulations and requirements are increasingly stringent. So, if you want to be on the cutting edge, look new.


Despite the latest and greatest in safety features, insurance for a new vehicle usually comes with a bigger price tag. No matter which way you go, research the insurance costs before you make the purchase.

Whichever way you decide to buy, focus on this: Drive that car for years to come. The fewer car decisions you make, the more money you’ll be able to direct to other important goals.

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