Team Clark is adamant that we will never write content influenced by or paid for by an advertiser. To support our work, we do make money from some links to companies and deals on our site. Learn more about our guarantee here.
When it comes to buying a car, one of the first things you may ask yourself is whether you should buy new or used. Of course, there are advantages and disadvantages to each.
In this article, I’ll take a close look at the benefits and drawbacks of new versus used cars so that you can make the best decision when you buy.
This article was updated in September 2023 and I review it every six months.
New or used, a car is a big purchase. Before you buy either, it’s important to know what you can afford and what you need. If your finances allow you to buy a new car with cash or a relatively short loan term, then the benefits of owning a new vehicle may be worth it to you. Still, for most people, buying a used car is a better option.
“My preference is for you to buy a two or three-year-old used car rather than a new car,” money expert Clark Howard says. “Because when you buy a new car, it loses value the minute you drive it off the lot.”
If you’re on the fence about buying a new versus a used car, consider the benefits and drawbacks of each. Also, keep in mind that 2023 isn’t a normal year for the vehicle market. The COVID-19 pandemic and semiconductor chip shortage have led to record-high prices on both new and used vehicles over recent years. Fortunately, prices are finally starting to come down.
If you plan on purchasing a car right away, here’s Clark’s advice for the current market: “If you can buy that three-year-old vehicle for a third less than what a new one would be, then go ahead and buy the three-year-old used vehicle. On the other hand, if the gap is less than that, that would push you more toward buying a new one.”
Here are some additional advantages and disadvantages of buying used versus buying new as well as tips for buying either.
Below, you’ll find more detailed information on the advantages and disadvantages of buying both new and used cars as well as how to decide which one you should buy.
While the process of shopping for a used vehicle may not be as straightforward as picking out a new one, there are still definite benefits to buying used.
“I’ve had an obsession forever about why buying a used vehicle is so much better for your wallet than buying new,” Clark says. “For most people, buying used is going to be a much better choice.”
In addition to being less expensive upfront, a used car will also have better insurance rates and a better resale value, Also, you’ll be less likely to get upside down on your loan (owing more than the car is worth). Unfortunately, there are also a few drawbacks to buying used. A used car is often less reliable, is usually sold “as-is” and comes with more expensive financing.
While there are both advantages and disadvantages to buying a used car, it’s most likely the best choice for the majority of people. Here are a few of the reasons why a used vehicle may be the best choice for you and your wallet:
Buying a used car is a great move financially. Unfortunately, a used car can come with some disadvantages. Here are a few of the major ones to keep in mind:
If you do plan on purchasing a used car, there are a few things that you can do to make the process a little easier. Here’s what Clark recommends:
“Buying a used car involves a little more risk than buying a new car because you never know how the previous owner treated that vehicle,” he admits. “One way to minimize that risk is to buy used car models that have proven to be reliable. Another way is to get a mechanic to inspect a vehicle prior to purchase.”
If you’re looking for a way to check the reliability stats of a vehicle, Clark recommends Consumer Reports. The magazine publishes an auto issue every April. You may be able to find the most recent April copy at your local library. You can also visit the website to get digital access to the used car ratings for $39 a year or $10 a month.
In addition to doing your research on the type of car that you should buy, also be sure to get the specific vehicle inspected. Because you’ll likely be buying the car as-is with no warranty, it’s important to make sure that everything is in working order. Clark recommends that you find an ASE-certified (Automotive Service Excellence) mechanic. Garages that participate in the Blue Seal program typically feature the most highly trained ASE-certified mechanics. Visit ASE.com to find one near you.
Before you start shopping for a new-to-you vehicle, be sure to read our 7 steps on how to buy a used car.
Most likely, a used vehicle is the smarter financial option for you. Still, that doesn’t mean that you can’t get a new car.
“There are a lot of people who love that new vehicle smell; they want that new vehicle,” says Clark. “And if it works for you financially, that’s fine!”
If you’re buying new instead of used, it’s just important to take the time to figure out exactly what you can afford. Here are a few of the biggest advantages and disadvantages of buying a new vehicle.
Buying a new car has a certain appeal to it, but that’s not the only perk. Whether you’re looking for the latest style, extended warranties or the most up-to-date safety features, a new car may be something you’re interested in. Here are the big perks of buying a new car:
While the advantages of a new car are undeniable, there are definite drawbacks to keep in mind. This is especially true when it comes to making a financially conscious choice. Here are a few of the biggest disadvantages to consider when shopping for a new car:
If you do decide to purchase a new car, Clark’s advice is to make sure you can afford it. He has a rule to help you figure that out:
“If you cannot afford the payment per month on a 42-month loan, you’re buying more vehicle than you can afford. Taking out a longer loan to get a more affordable payment is a big, fat warning that you’re hurting yourself, harming your finances and limiting your options in life.”
If you feel that a new car fits into your budget, there’s no harm in considering it. Just like with a used car though, you’ll want to figure out your finances first and get pre-approved before you buy.
For more tips on how to buy a new car, check out Team Clark’s five-step process.
Ultimately, there are both advantages and disadvantages to buying a used car and to buying a new car. Still, for most people, a used car is going to be the smartest financial decision.
“Because the average used vehicle is (normally) less than half the price of a new vehicle, without a doubt, I want you to go with a used vehicle — not new,” says Clark.
While the pricing of both new and used cars is still high right now, Clark expects the prices to continue gradually decreasing throughout 2023. You can find more information on the best time to buy a car here.
If you are considering buying a new car, make sure that you can afford the payment on a 42-month loan. Otherwise, you’re buying more than you can afford. If instead, a used car makes the most sense for you, just be sure to do your research. Check out Consumer Reports’ recommendations and get a mechanic to inspect a vehicle before you buy it.
No matter which type of car you decide to buy, get pre-approved before you try to make a purchase. You’ll likely find the best rates at a credit union. It’s also a good idea to determine how costly it is to repair and insure the vehicle. Finally, be sure to shop around for the best price or best overall deal. If you’re shopping for a used car, don’t forget to check the book value of the car and look at the car’s history before considering it.
For more advice on buying a new or used car, check out the cars category in the Clark.com Community!
This post was last modified on September 14, 2023 7:45 pm
Deciding to save and invest are great habits. But once you check that box, your…
If you're considering subscribing to Fubo, you need to be comfortable missing out on some…
Are you looking for a way to earn 2% back on every purchase you make…
You're not alone if you're running a balance on your credit cards. Collectively, Americans are…
A big part of saving money comes down to knowing how to comparison shop. But…
If you work for a big company as a full-time employee, chances are you have…