Buying a New or Used Vehicle: Which is Right for You?

Buying a New or Used Vehicle: Which is Right for You?
I might be a sucker for a "factory fresh" car, but that doesn't make it right for everyone.

The internet is a great tool for quickly finding subjective information that then gets passed along or presented as fact. I am well aware of the irony that exists as I type this article that will be searched for, and read via the internet. Regardless of how you use technology, it is simply no substitution for seeking advice from someone you trust; be it a friend, or a family member. Apparently, I must be regarded as one of these trusted advisers, or as my friends would like to call me- the “Car Consigliere.”

Although I frequently get asked a wide variety of questions, ranging from odd vehicle noises to best tips for beating a speeding ticket, there is one question that is asked more than any other: “Am I better off buying a new or used vehicle?” Remember that subjective information thing I mentioned earlier? Yeah, here it is and this is where I need to be careful with how I give my advice.

Believe me when I say, there is something quite special about purchasing a new vehicle. Maybe it is the plastic on the seats, or the smell of factory-fresh materials, or simply the fact that you are the first one to experience everything with the vehicle. Whatever the appeal, buying a new car is indeed a special occasion and worthy of celebration and many selfies. Unfortunately for most people, buying a new vehicle is also quite expensive and usually requires the sacrifice of features in order to be within one’s budget.

Historically, people who were seeking a vehicle with more features or a higher trim-level on a budget, sought out the used car market. With the wonderful advent of Certified Pre-Owned (CPO) vehicle programs, getting a used vehicle is now (almost) as special as buying new. In most cases, CPO vehicles are given a generous inspection, a light reconditioning, some form of a factory-backed warranty, and even special financing rates. All of these combined make purchasing a used vehicle very appealing, but does it make it the right choice for you?

According to an article by Chris Woodyard of “USA Today,” used car prices are holding high, primarily because of the increased appeal and demand for these CPO vehicles. With an overall drop in fuel prices and an increase in home improvement/construction, trucks and SUVs are showing the strongest resale prices in the CPO market. Although prices are holding strong, there are still plenty of CPO vehicles that provide an excellent value for the dollar; even if prices aren’t as low as one might expect from a used vehicle.

In a simple search of Volkswagen’s website, a new, 2015 Volkswagen Tiguan S with standard equipment, carries an MSRP of $27,120. Meanwhile, a very low mileage (2,497 to be exact) 2013 Tiguan SE w/navigation, upgraded wheels, upgraded interior, heated seats and a panoramic moonroof, can be grabbed from a local dealer’s lot for only $24,869. Now bear in mind that the new Tiguan S is offering an additional $1,000 cash back promotion, a longer warranty period, and have the option of being leased (more on that another time), but if someone wanted a vehicle with more features for around the same price- the CPO vehicle would be the better choice in this particular instance.

Unfortunately, credit ratings can be the big deciding factor on purchasing new or used. Banks tend to favor new vehicle purchases and are usually willing to give better rates on these vehicles. However, since CPO vehicles go through a thorough inspection and carry a warranty, special financing rates can be applied to these as well. Drawing on personal experience, I found that my credit union would write a used vehicle loan with an APR almost 4% lower than the dealer’s banks, making it comparable with new vehicle rates.

Determining an acceptable monthly payment range can also make the difference between a new or used vehicle as well. I always suggest that this range be determined before ever stepping foot into a dealer, so you have a good basis for negotiation and can get a clearer picture of what is a better value overall. Negotiating a sale price is good for a cash deal, but if financing (or leasing) is involved, then start negotiations with the payment, then the interest rate, and then onto the most important factor- how much you will end up paying by the end of the term.

All of these factors are important to finding the right vehicle that is right for your budget, but how about finding a vehicle that is right for you? Seriously, you can nickel and dime a dealer to death over what might appear to be a good deal, but let’s face it- if you don’t purchase a vehicle you totally love, then you are simply wasting your money. Sadly, I have been behind the wheels of vehicles that I bought out of sensibility, but ultimately I traded out of them early (and paid a dear price) to purchase a vehicle that I would truly enjoy driving every day.

I feel that successful vehicle ownership comes from genuinely appreciating every possible moment behind the wheel. A vehicle is not an expendable item, nor is it something that should be looked at as merely “transportation.” Regardless of budget or stage in life, with the right amount of searching- you can find the right vehicle that best suits you and will bring you joy for many, many, miles. So in the end, is my subjective reasoning a cop-out? No! I feel it is simply the best way to make a big purchase you won’t regret and add additional value to your investment. After all, you have to live with this vehicle for quite a few years, so you might as well be happy, right?

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