New vs. Used Car: Which Ride Is Right for You?

On the hunt for some new wheels? You’re not alone: 78.7 million cars were purchased globally in 2018 alone. When it’s time to start shopping, you’ll probably put together a list of “musts” and “wants,” like manual or automatic, car or SUV, two door or four door, gas or hybrid—the choices go on. But before you start picking out paint colors, there’s one important decision you must make first: New or used? There are positives and negatives no matter your decision—let’s examine them both:

Buying New

  • Pros
    • A fresh start: The best part of buying a new car is the knowledge that it’s exactly as the factory made it. You’re not dealing (either in headaches or costs) with that time someone put diesel in the tank, forgot to change the oil for two years, or tried to install a spoiler themselves.
    • Warranty safety net: Manufacturer warranties on new cars cover a multitude of auto sins. While it may vary based on manufacturer, they typically offer three-year/36,000-mile, bumper-to-bumper and five-year/60,000-mile powertrain warranties. While this doesn’t cover the normal wear and tear, like replacing tires or brakes, accidents or theft, it can cover big-ticket items you’d otherwise be responsible for.
    • The latest and greatest: Let’s be honest: Everyone likes a shiny new toy. When you buy a brand-new car, you know you’re getting the very latest technology, safety features, and conveniences. Opting for the bells and whistles doesn’t necessarily have to break the bank—some financial institutions like FCB Texas offer exclusive, low “relationship rates” for borrowers who are also customers.
  • Cons
    • Sticker shock: The most obvious downside of a new car is cost. While some dealerships may work with you or offer specials, there’s a lot less room for negotiation than on a used car. It’s important to crunch the numbers before committing to long-term financing. 
    • Depreciation: It’s the dirty word car dealers don’t want you to know. According to Edmunds, the second you drive your brand-new car off the lot, it’s immediately worth 11 percent less than you just paid for it. Fast forward five years and you’re seeing a 15- to 25-percent loss, which climbs to 37 percent after five years. Your $30,000 new car will fetch, at most, $18,900 if you sell it five or more years later.
    • High insurance rates: When determining your car payments, it’s vital that you factor in insurance premiums, which will always be higher on new cars. High-end models and foreign cars with more expensive parts will also factor into your insurance policy’s bottom line.

Buying Used

  • Pros
    • Room to haggle: It’s often said that no one pays sticker price on a used car. A great advantage of working with a dealer looking to make a sale or a motivated personal seller is the opportunity to negotiate final price. Financing? A lower price means a lower monthly payment for you. Want to save even more, haggle-free? Make sure you’re getting a great rate. FCB Texas’ low relationship auto rate is one of the most competitive around and valid on new and used car purchases.
    • Lower insurance rates: Unless you buy a car outright without financing, you’ll always need to carry comprehensive insurance until you have paid it off completely. That being said, older cars typically require lower premiums than new cars.
    • Potential resale profits: Luckily for you, someone else already took the depreciation hit on a used car. That means you have a greater likelihood of turning a profit when you decide it’s time for your next upgrade.
  • Cons
    • Inherited headaches: Remember those diesel fuel, forgotten oil changes, and after-factory spoilers mentioned earlier? They’re now your problem and, unlike the spoiler, they’re not all easily spotted. You could be paying for someone else’s mistakes down the line with no manufacturer warranty to save your wallet.
    • Necessary compromises: The likelihood of you walking onto a dealer’s lot or scrolling though seller posts and finding the exact car you want, in the exact color, with the exact accessories, is very low. Chances are, you’ll have to sacrifice something on your dream car.
    • Yesterday’s news: Unless you buy a new car, you won’t be driving away with top-of-the-line technology or the latest in safety features. For some people, this isn’t a deal breaker, while for others it’s nonnegotiable. You need to decide which kind of buyer you are.

Now that you better understand the pros and cons of buying a new or used car, it’s time to find your new ride and hit the road!