Bac G1 - G2 2009 Oral Exam: How to Choose Between New and Used

Should your next car be new or used? Ask ten friends and you'll likely get an equal number of votes for each option. If you're debating which kind of car to buy, here's some information that might help you make a decision.

While a car continues to lose value throughout its useful life, the rate of depreciation is most dramatic right after title transfers from the dealership to the first buyer. There's no question that the next buyer - the guy buying a used car - benefits from the original owner's loss. What's more difficult to quantify is the subjective value of driving a brand new car. Some car buyers are willing to accept rapid depreciation in exchange for that new car smell.
Ironically, it may make more sense to buy a new than a used car if you don't have a lot of cash on hand. Because dealers make money not only on the car but on the financing deal too, they make it as easy as possible for buyers to get behind the wheel of one of their cars. That means a low down payment and easier loan approval than you could get at a credit union or bank. Dealerships will offer you financing on their used cars as well, so buying a used car may still be an option.

This is probably the one area where most people agree: The manufacturer's warranty makes a strong argument for buying new. Warranties that cover everything from roadside assistance to regularly scheduled maintenance protect new car buyers from performance and repair headaches. Compare that with the lack of information and protection many used car buyers get.

Dealerships that sell used cars often provide warranties, but they tend to be much shorter and may not cover as many potential problems as new car warranties do. One exception is the "factory certification" program offered by many car dealers.
One other risk used car buyers should be prepared for is the possibility of not meeting ever stricter auto emissions and performance guidelines. All new cars comply with these requirements - not all used car buyers realize that.

The fact that both the new and used car markets are thriving proves that there are compelling arguments for each option, which is exactly why it can be so hard to decide which way to go. If you're still stumped, may be you need to ask eleven friends and go with the majority vote.

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