When it comes to purchasing a car, the toughest decision is figuring out whether it is more cost effective to buy a used car outright or seek financing for a new car. It can be difficult to come up with one answer that will cover all contingencies, so those who are in the process of buying a vehicle must consider the financial cost of their choice, as well as any intangibles.
There are different methods for purchasing a new or used car: buying new, buying use or leasing. When these three methods are compared to one another, buying a new vehicle has the largest out of pocket cost over the average life of a car (six years).
However, there are additional costs that should be baked in first. Those who buy new vehicles or decide to lease are able to avoid costly repairs and maintenance, and those who choose a used car are often forced to spend the difference on any number of additional vehicle needs. All used cars are not created equally and while some are lightly used and able to stand up over the long haul, others will cause you to spend more than you saved.
While there is a certain joy that is closely associated with the ownership of a new car, there are also tangible advantages to be gained from this approach. Purchasing a new car means having added flexibility should you decide to sell, as a newer car will always fetch a far greater asking price than an older one.
Newer cars also have the latest features and technology, as opposed to older cars that are many times outdated. The level of prestige and enjoyment that comes with driving a new car is more of a creature comfort, but this is a factor that tends to drive our decision making.
Used cars may come at a cheaper price and with less upfront hassle, but a new car can be driven without regard for mileage. Choosing a used car in order to save money often means having to be more cognizant of driving the vehicle for particularly lengthy distances and periods of time.
Conversely, used car owners are freed from the tyranny of a monthly payment. They are able to set aside the money that is saved each month and put it towards necessary maintenance and repairs. Having a fund such as this on hand reduces the amount of financial strain that is placed on the owner of a used car.
There are a number of factors that must be considered when making a decision of this magnitude. Be sure to make your own calculations and take every intangible into account before coming to the decision that works best for you and your personal needs.