Is a New or Used Car Smarter?

One of the biggest buying decisions we can make is getting a car. We’re talking thousands of dollars for a car we want to carry us where we want to go for a long time.

Yet most people really don’t take the time to understand just how much money they are really spending. And what they are getting for their hard-earned cash.

Which is a better deal, a new car or a used car?

Well if we were talking about 30 years ago, a new car would be the smarter move. But since it’s 2015, that’s not the case anymore.

New cars are made much better now.

The fact is, cars are made much better than they were 30 years ago. That means a used car that’s 5 years old could still look brand new. And have 100s of thousands of miles of life left. So as far as reliability goes, a used car with low mileage can still be a great choice.

Paying cash or financing?

When most people buy a new car, they put 10-15% down and finance the balance. The problem here is that the way an auto loan is structured, the dealership is always going to be on the winning end. And you’re going to pay a mountain of interest by the time you pay it off.

So unless you’re prepared to pay for a new car in full, let’s say $25,000 to as much as $60,000 for a nice car, but nothing crazy, you’re going to pay big time.

Either way, you’re going to be out some serious cash.

What About a Used Car?

If you want to save as much cash as you can, buying a good used car really makes sense. First, you’re not likely to get an auto loan, which means you’re saving a pile of interest charges, (which is always a good idea).

And what’s great about buying used is, you don’t necessarily have to buy a “clunker.” Many major car brands now offer deals on “certified” used cars. These cars may have been originally offered for lease, and are “low mileage.”

When they are returned to the dealer, they are not new, but they are hardly used in many cases. Picking up a certified used car (and paying for it in cash) can be your best move, especially since dealers tend to extend the manufacturers warranty on these low-mileage vehicles.

Plus, when you buy a certified used car with a warranty, your repair costs will stay low for a few years. While your vehicle still retains a substantial amount of equity. Which you can tap into by selling the car later, or trading it in on a newer-model certified used car down the road.

So before you take out a four-year loan on a new car, shop the “certified” used cars to save a bundle.

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