When considering a used car, you should ask yourself some questions:
1. How long are you going to keep it?
If you want to keep a car for more than 5 years, buying used isn’t always a good deal. Depending upon the mileage and age of a used car, it can sometimes be a really bad idea to buy used if you’re planning on keeping it for a long time. For instance, if you drive 15k miles a year and you buy a car with 75k miles on it, you’re not going to get more than 2 or 3 years out of it before you start spending major money on repairs and maintenance. While you might have saved big bucks because you bought used, if you end up spending thousands of dollars on repairs two or three years down the road, did you really save? The point is, buying new is more expensive but it is worth it in some cases. But before you decide, ask yourself…
2. OK — How long do you think you’ll really keep this car?
Most people buying a car will say that they’re going to keep it for at least the next five years, but the average term of ownership is only 39 months (about 3 years). The truth is that most of us overestimate how long we’re going to keep a car. And there’s a good reason for this — as our lives change, so do our cars. Three years from now you could have a new job, a new house, a new pet, a new hobby, a new baby, etc., any of which would require you to change vehicles. Also, ask yourself how long you’ve kept cars before. If you’ve never had a car for more than 3 years before in your life, why would that change?
3. If you’re not going to have it for very long, why buy a new car?
The biggest advantage of buying a new car (aside from that wonderful smell) is that you know it will last a very long time. You can make sure it’s properly maintained, you know it’s strengths, personality, etc. But if you’re only going to have a car for two or three years, all the advantages of having a new car go away. They’re expensive, they depreciate, and they’re hard to trade-in until they’re almost paid off. For all these reasons, if you’re only going to keep a car for 2 or 3 years, buying used makes a lot of sense. Used cars are less expensive, they don’t depreciate as much, and if you get one in good shape with a warranty you shouldn’t have any repairs or expenses.
4. What’s your financial situation?
Do you have any outstanding credit-card debt? What about 2nd mortgages, home equity loans, or student loans? If you can answer “yes” to any of those, you might want to think about going with a used car. Getting an inexpensive used car can help you pay off your other debts early. Once all that other debt is gone, feel free to treat yourself to a nice new car.
One last question — Are you picky? I mean, really really picky? If you are (and that’s OK as far as I’m concerned), you should buy new. Used cars always have scratches, dents, rattles, squeaks, stains, etc. None of that stuff should be too bad, but ultimately a “used” car is, in fact, used. Make sure you’re OK with this fact before you buy one and you’re sure to be happy.