Should Your Next Car Be New, Used or Certified Pre-Owned?

There are many good reasons to buy a new car. Nonetheless, about 75 percent of car buyers opt for a used vehicle. What are the advantages and disadvantages of buying new versus used?

New car advantages

• You get the car you want.
• The warranty covers the car, as specified in the contract, and is backed by the manufacturer.
• You have access to the latest vehicle safety and convenience features.
• Maintenance may be covered, at least initially. Check the contract for the details.
• Banks and credit unions may offer lower interest rates on loans.

New car disadvantages

• Depreciation during the first three years can be massive. If you need to sell during this period, you will take a big loss.
• The latest technology may be troublesome, especially if the model has just been redesigned. Some problems are caused by owner confusion about operating systems with which they are not familiar, while other problems may be caused by bugs that require updates.
• Until it happens, you will likely worry too much about getting that first ding on the car door.
• Insurance premiums and governmental fees, such as taxes, may be higher.

Used car advantages

• The price is lower.
• You may find a car with features that you want--for example, a manual transmission--which are no longer widely available.
• Insurance costs should be lower.

Used car disadvantages

• You may not know how it was used or serviced.
• Many normal wear items, such as tires and brakes, may be on the verge of needing replacement.
• You probably won’t find a used car with the latest features, such as automatic emergency braking, built-in navigation or Bluetooth connectivity.
• Your loan interest rate may be higher than for a new car.

What about Certified Preowned (CPO) vehicles? These are late model used vehicles that have been thoroughly inspected and come with a known service history. Usually offered by new car dealers franchised by that brand’s automaker, they include an extended warranty, though the warranty may differ significantly from that for a new car. Special financing packages may also be available. Although satisfaction rates are better than for non-CPO used cars, the prices are usually higher.

AAA strongly recommends that before you buy any used car, you have it examined by a technician who has no interest in the outcome of the sale. Also, for CPO cars, read the contract carefully. There are significant differences in plans offered by different automakers.