Buy New or Keep the Old?

Advantages and Disadvantages of Buying a New or Used Car, or Simply Holding onto the Older Car.

It has recently been reported that car owners are holding onto their cars longer than ever before, now on the average of four years instead of three years. It has also been reported that business for retailers and other sellers of spare parts for older cars is booming. While this may be good for the sellers of parts for these older cars, consumers may be making a serious mistake by holding onto their old cars longer. Particularly so in this time where automotive dealers are offering better incentives and rebates than ever before. Therefore, before deciding to hold on to that old car it may be wise to compare the advantages and disadvantages of old vs. new. Likewise the consumer should consider seriously whether to buy a used car or a new car as there are likewise advantages and disadvantages to each.

If you are considering buying a used car you should do so with a certain degree of skepticism because more than likely you are not going to hear the truth from the seller, whether it be an individual, used car dealer, or a used car from a new car dealer. First, you should be very wary that in buying a used car fraud appears to be the most common problem. There are several different kinds of fraud including blatantly lying about the previous history or the previous ownership of the vehicle; changing the terms of the purchase contract; laundering cars that were repurchased as lemons or as salvage to make them appear as if they were ordinary use cars; forging your signature on documents; and so forth. The most common of these occur when the seller either deliberately or negligently does not provide a prior history of the vehicle, particularly as pertains to prior collision damage.

Under the California Vehicle Code There are certain types of damage which must be disclosed, as follows:

1. prior damage of more than $500, or 3% of the manufacturer's original suggested retail price, whichever is greater. Thus for example if buying a used car that was originally sold for $30,000,three percent is $900 and any damage exceeding that amount would have to be disclosed;
2. Damage to the frame or drive train, or to the suspension of the vehicle if it requires major repair; and
3. If there was major damage which occurred in connection with the theft of a vehicle.

The best way to safeguard against some of these deceitful practices is to obtain a report of the previous history of the vehicle from Carfax or similar provider of such information on the Internet and to have a or examination and inspection of your vehicle by a reliable, experienced mechanic and also by a body shop to check for prior damage to the frame or body of the vehicle. Before considering buying a used car, however, you should seriously consider the advantages and disadvantages of buying a new car vs. a used car. In today's marketplace, with so many incentives and rebates being offered by manufacturers and considering the high cost of repairs for an older used car, it may well be worth calculating the costs of holding onto that old car compared to trading in your old car; and investigating the costs of buying a used car vs. the costs of paying for potentially trouble-free new car.

The following is a list of some of the benefits and disadvantages of each:

The most obvious advantage of buying a new car is that it comes with a comprehensive manufacturer’s warranty typically of three years or 36,000 miles, whichever comes first, although many manufacturers are now offering muchgreater bumper-to-bumper warranties and even more extensive warranties on certain parts of the vehicle such as the powertrain. Usually, these warranties will cover almost any problem you may encounter during the period that the new car warranty period. Additionally, you can be sure that the new car will have the most up-to-date safety features, not to mention the comfort and convenience features that are available today. Lastly, when you are the first owner of a vehicle you need not be concerned about previous mechanical problems or accidents, or the prior ownership history.

On the other hand, the price of new car will certainly be more than buying a used car. Additionally, insurance costs will likely be higher, but some of these are offset by the discounts offered by the insurance companies because of the numerous safety features of the new car. Finally, you should plan on holding onto a new car long enough so that the depreciation is spread over the years of ownership.

In considering buying a used car the most obvious advantage is that it will be cheaper than buying a new one. Also, the cost of buying an older luxury model may not be much greater than buying a new, more basic model. Additionally, the insurance based on the cheaper value of the used car is likely to be less. Finally, the rate of depreciation will be less for the first two years of ownership. As opposed to these advantages of buying a used car there is the great disadvantage of not knowing the prior maintenance records and repair history, including prior damage or accidents. While there are used-car warranties which may be made available by the used-car dealer and separate insurance companies, there is no comprehensive, comparable new car bumper to bumper warranty available. Additionally, the older car is certainly not going to have as many safety and convenience features as the new car. And, most important, maintenance costs of the older car will be considerably higher than that of the new car particularly as the vehicle gets to the end of its life, in most cases about 100,000 miles.