Should I Buy a Used Car?

Capital One

If saving money on a vehicle purchase is your primary objective, buying a used car is the best course of action.

Advantages of buying used:

• Potentially save thousands of dollars compared to a new vehicle’s price tag
• Can get a larger or more luxurious vehicle at similar cost to a standard new vehicle
• Typically lower insurance and registration costs

Disadvantages of buying used:

• No way to be 100% certain the vehicle was properly cared for by the previous owner(s)
• Imperfect cosmetic and mechanical condition
• No warranty or guarantee of any kind after the factory warranty expires
• Less flexibility in terms of matching vehicle condition to desirable colors and features
• Older safety engineering and systems
• Aging infotainment technology
• If financing, you’re likely to pay a higher interest rate

Effectively, when you choose a used vehicle, you’ve let someone else absorb the steep depreciation that occurs during a car’s first several years on the road. If you wait to buy until it loses half of its original value, you’ll pocket the cash in exchange for your patience.

Alternatively, depending on what your budget allows you to spend on a new vehicle, choosing a used model may allow you to upgrade in terms of size or luxury. Rather than get a new midsize SUV, you can buy a used full-size SUV. Or you can upgrade from a new mainstream brand to a used luxury brand.

Furthermore, older vehicles typically cost less to insure and register in many states. In combination with your savings on the purchase, this can add up to a financial windfall.

However, you’re going to want to set some of that savings aside for maintenance and repairs. Used vehicles often require more of each and sooner in the ownership cycle. You can try to guard yourself against any surprises by performing a vehicle identification number (VIN) check and getting a mechanical inspection first. Used vehicles that were clearly well cared for and have a full history of records supplied by the previous owner can be good bets. Nevertheless, with a used vehicle, you’re assuming greater risk of problems in exchange for greater savings.

You may also need to settle for a color combination, powertrain, or equipment list that isn’t your preference. For example, you might find a used car in like-new condition, but it might be in a color you don’t like, or have cloth seats instead of leather.

Used vehicles are not always as safe or technologically advanced as a newer vehicle. From a car’s underlying structural engineering and available semi-autonomous driving assistance systems to touchscreen infotainment technology offering Apple CarPlay, Android Auto, and Wi-Fi connectivity, used vehicles are often less sophisticated than new vehicles. This lack of advanced technology could prove to be a benefit of buying used as many people prefer the comparative simplicity of older vehicles.

Conventional wisdom says that buying used is financially smarter than buying a new vehicle. Mainly, the reason is rooted in depreciation. Buying a used car, however, is not without financial risk. And while there are ways to mitigate that risk by choosing a vehicle with a clean VIN report, full maintenance records, and both visual and mechanical inspections showing the vehicle is in good condition, there are no guarantees of quality with a used vehicle like there are with a new one. You are, as they say, on your own.