In general, a new car will cost you more to purchase than a used car—but, if the used car is not in good shape and turns out to be a lemon, the total cost of owning a used car could be higher. So, be careful with used cars, because you never really know what you are buying.
If you can afford it, a new car is typically the vehicle of choice. Here are some criteria to help you determine if a new car is suitable for you according to your objectives and needs.
- You regularly travel long distances. A new car will hold up better under heavy use.
- Styling and appearance are important. There is nothing like the way a new car appeals to the senses.
- You can't afford to have the car in the shop unexpectedly. If one of your main objectives is reliability, you may be taking a gamble with a used car. Of course, new cars break down, too, but you don't expect it to be often.
- You don't have the time and/or the ability to fix the car if it should break down. A new car may be your best bet if you don't have the time or know-how to fix a used car when it breaks down.
IMPORTANT NOTE: A new car can lose as much as 30 to 40% of its value in the first year. If you plan on keeping the car only one or two years, you may end up losing quite a bit of money.
Try to avoid ordering a new car; delivery can take months and a security deposit will likely be required. If you can, buy one off the lot.
Dealers generally run specials on new cars at various times during the year, offering rebates and low- or no-interest-rate financing. If you can wait, this is one of the best times to negotiate a good price.
Not everyone has the money or the desire to own a new car. If you have the opportunity to buy a car from a relative or friend that you know has taken care of the car, it could be a good deal. Here are some criteria to help you determine if a used car is suitable for you according to your objectives and needs.
- You live in a neighborhood where you're concerned about theft or vandalism. If you live in an area where theft or vandalism are a concern, it may make sense to buy a used car and save yourself the stress of worrying if the car is vandalized or stolen.
- You need the car only to commute a short distance back and forth to school or work. The less mileage you put on a used car, the greater chance of it not breaking down too often.
- You can't afford or don't want to assume the higher monthly payments of a new car. New car prices are so high that a large number of people just can't handle the payments.
- You enjoy tinkering with engines. If you are mechanically inclined and have the time, you may be able to maintain the car efficiently.
- You need a second car as a backup. You already may have a decent car and are looking for a backup for whatever purpose.
*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a Registered Broker-dealer (Member FINRA/SIPC) and SEC-registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. General Electric Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.