a man sits beside his dog under his car’s open hatch after reading an article on buying a new car vs used from Gate City Bank

Buying a New Car vs. Used: 8 Key Points to Drive Your Decision.

When deciding between a new or used car, there’s no one right answer for everyone. Each option has its pros and cons.

By Jocelyn Allen – AVP, Personal Lender | Estimated read time: 4 minutes

The best choice for you comes down to your budget, what you need in a car and how long you plan to keep it. Let’s look at all the factors, one by one.

8 Things to Consider:

Price
Value
Upkeep
Insurance
Interest rates
Environmental impact
Personal safety
Vehicle vibes

Price

New cars usually cost more than used cars because you’re paying for the newest model, latest features and no miles. Used cars tend to cost less because they feature older technology and often show some wear and tear.

Whether you choose new or used, it’s important to ensure you can afford the monthly loan payment. Keep in mind that the average payment for a new vehicle can be up to $200 higher than for a used car.

It’s also important to be comfortable with the terms of your loan. Remember, you have the flexibility to choose from options like three-year, five-year or even longer loan terms. (Psst. Try our easy car loan calculator to test drive the numbers!)
Value

A new car loses value fast – about 20% the moment you drive off the lot. So if you sell it later, you might get much less than the sticker price. Used cars lose value more slowly because they’ve already experienced that initial depreciation. That means you may get more money back later if you decide to sell.
Upkeep

New cars typically have fewer problems early on and can last longer. They also usually come with a warranty, which covers certain problems in the first few years. However, new cars still need oil changes, tire rotations and other services, which can add up.

Since used cars have more miles, they may need more frequent maintenance. It might be worth considering an extended warranty, which can provide added peace of mind by covering repairs. This helps ensure you’re not left with unexpected expenses as your vehicle ages.

Pro Tip:

If you’re buying a used car, check its history for service records and signs of damage or accidents. Many dealerships offer this information upon request. You can also use free online resources like Carfax, AutoCheck and VehicleHistory.com.

Insurance

Insurance for a new car can cost you extra because the vehicle is worth more and repairs are typically more expensive. You may also choose to get higher coverage, like comprehensive and collision insurance.

With a used car, you could save on insurance since the vehicle is likely worth less. And costs may drop more if you choose lower coverage, such as liability insurance. (Pre-owned cars also typically come with lower title fees and sales tax.)
Interest rates

New car loans often have lower interest rates because the vehicle is seen as a safer investment for the lender. They can also come with longer terms, which can result in lower monthly payments.

Used car loans typically come with higher interest rates because lenders may view them as riskier or harder to accurately value compared to new cars. These loans also tend to come with shorter terms, which can result in higher monthly payments.

Pro Tip:

To get the best rate, do your best to beef up your credit score. And if you set up automatic loan payments with a Gate City Bank checking account, you could earn a 1% discount!

Environmental impact

When it comes to helping the earth, new cars typically have better gas mileage and cleaner technology. On the other hand, buying used helps reduce the demand for new cars to be built in factories.

At the end of the day, the model you choose may have more of an impact on the world’s well-being than whether it’s new or used. For example, a more compact sedan will likely have a smaller carbon footprint than a large SUV or truck.
Personal safety

Speaking of well-being, new cars tend to have the latest safety features, like automatic brakes, lane assist and better crash protection. Older cars may not have these features. When deciding between a new or used car, think about how important certain safety features are for you and your passengers.
Vehicle vibes

There’s something exciting about driving a brand-new car. You get to choose the color and features you want, and you know its history is spotless. However, while used cars might not feel as “new,” they can still be a great choice if you find one in good condition. Many people love the thrill of saving money while still getting a great car.

Let’s Guide You Down the Road.

Debating on whether to buy a new or used car doesn’t have to grind your gears. By considering these factors, you can make a smart decision that works best for your needs and budget.

We’re right beside you for the journey! Apply for a car loan online, or contact one of our helpful lenders to get pre-approved today.