Should You Buy New or Used?

buy new or used carIt wasn’t that long ago that making a money-saving choice between buying a brand new car and used car was a no-brainer.

Prior to 2009 used cars were relatively inexpensive, on average, based on a large supply fueled by trade-ins, lease returns, rental car replacements, and fleet turnover— all driven by a good economy.

Likewise, brand new cars were experiencing record sales with strong demand which kept new-car prices relatively high.

Then the economy changed and the automobile business changed with it.

Simply put, used car prices increased because more people chose to keep their old cars and fewer people bought or leased new cars, which not only reduced the supply of trade-in and replacement vehicles but created a longer-term shortage of lease returns. A smaller supply of used cars, particularly newer used cars, makes for higher dealer wholesale prices, which results in higher retail prices and fewer choices for used-car buyers.

The poor economy had the opposite effect on new-car prices. Since people stopped or slowed down their new-car purchases and leases, prices on new vehicles dropped significantly, primarily as a result of heavy incentives offered by nearly all major car companies to help boost sales again. There have been “cash for clunker” programs, “employee pricing” schemes, cash-back rebates, factory-to-dealer cash, loyalty bonuses, 0% APR loan rates, $0 cash down, and special low-payment lease deals.

And since used car prices are high, new-car buyers are getting great prices on their trade-in vehicles. Low new-car prices combined with high trade-in prices makes for some incredible deals.

New car deals have never been better than now and the last couple of years. 2012 looks to be as good or better.

The effect of all this is that used-car prices have become so high that they’re seriously competing with new-car prices. Used cars are not the bargains they were a few years ago.

With new cars you get a full manufacturer’s warranty, lemon-law protection, the latest technology and safety features, and better fuel economy. You also can get lower loan rates on new cars and leases, which you can’t get on used cars. New-car deals are especially good on last year’s leftover models.

Therefore, if you are thinking of getting a new-to-you car, don’t automatically assume that a used car is your best choice. Old rules don’t apply any more. Do your homework before you make a decision. Check out used car prices and compare them to new-car deals, especially those with manufacturer incentives like many of those listed in the articles here on You may be surprised at what you discover.


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