One of the first common questions when it comes to car purchases is whether to buy new or used. But what about when it comes to financing? Is it better to finance a new car or a used car? Consider the advantages and disadvantages of both new and used car loans so that you can make the best decision for your unique circumstances.
Advantages of Buying New
- You’re the first owner, so you don’t have to worry about the car’s history.
- New cars generally have lower interest rates than used cars.
- New cars often come with manufacturer incentives like 0% financing.
- You may be able to get a better warranty with a new car.
- New cars don’t typically require as much maintenance as used cars.
Advantages of Buying Used
- Used cars are often cheaper than new cars.
- Used car loans may be easier to get approved for, especially for bad credit or lower income car buyers.
- Used cars don’t depreciate as quickly as new cars.
- You can often find certified pre-owned (CPO) vehicles, which have been inspected and come with warranties.
Should You Buy a New or Used Car?
Deciding between buying a new or used car can be challenging. You’ll need to consider several factors.
- Your ability to get approved for financing
- Cost of the vehicle, including maintenance and insurance
- Reliability and repairs
- Features, both required and preferred to fit your needs
If you’re unable to get approved for financing a new car, you may want to consider choosing a used car as a stepping stone. Used car financing can be a great way to rebuild damaged credit or establish good credit for the first time.
By making on time payments, you’ll be positively contributing to your payment history, which is a primary factor in determining credit scores. Then, you’ll be able to come back later and buy your new dream car with better credit down the road.
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Factors to Consider When Buying a Car
No matter whether you decide to buy a new or used car, there are a number of factors that you should consider before making your purchase. This list could go on and on, but here are a few key things that you should keep in mind.
- Price and your budget
- Features and specs
- Maintenance costs
- Fuel efficiency
- Purchasing and financing options
Another great option to consider if you’re stuck between buying new and used is a certified pre-owned, or “CPO”, vehicle. These vehicles often come with warranties similar to new cars and have endured thorough inspections and testing prior to their sale.