New or Used?

• Depreciation: When you buy a new vehicle, as soon as you drive it off the dealer's lot, a huge chunk of the vehicle's value is gone forever because it is no longer new. New cars generally lose about 25 percent of their resale value the first year. Some models hold their value better than others. When you buy used, the car already has started depreciating, so someone else has taken the big, initial depreciation hit. To learn more about vehicle depreciation, see How the Buying Process Works.
• Costs: When you buy new, you pay more, and not just for the initial purchase, but also in taxes, higher insurance premiums, registration and licensing fees. On the other hand, used car owners have to consider the higher maintenance costs of keeping an older car running (such as replacing brakes, muffler and battery), as well as the possibility of a major repair (like replacing the transmission). This is where good research on makes, models and your particular used vehicle pays off: the more reliable the research, the less likelihood of unexpected expenses or buying a lemon.
• Warranties:The advantage is clearly with new cars here. Basic manufacturer's warranties are standard with new cars, and you can buy extended warranties for an additional cost. Avoid warranties from third parties. Some dealers may offer a limited warranty on a used car, but these are typically much weaker than a new-car warranty. And if you buy used from a private individual, it's highly unlikely that you would receive any kind of warranty at all.
• History: Many buyers want to know the exact history of a vehicle that they might buy. When purchasing a new vehicle, there is no real track record established, you're simply buying on the model's potential track record. However, there are various sources that track vehicle models' repairs and defects. To learn more, visit vehicle researching. Some places to check a used car's history are: www.edmunds.com; www.CARFax.com; and www.car-history-reports.com**
• Condition: The "shiny new" factor is a big selling point to some buyers. Some people also like the idea of being the original owner of a vehicle so they can be sure of how the vehicle is treated and maintained. On the other hand, the leasing market has created a large pool of previously leased cars that are good values since the individual and leasing company have taken the big hit on depreciation. You must decide what's most important to you.