Purchasing a New vs. Used Vehicle
Buying another vehicle is a major decision, especially since having a vehicle can impact the convenience of getting around and help make your daily life easier. No matter how many vehicles you’ve purchased in the past, there’s always the question of whether you’re going to buy one new or used. There are pros and cons to each, and it depends on what is best for you. Here are a few things to consider about purchasing a new or used vehicle.
It’s no secret that a vehicle – no matter the make or model – will depreciate the most in the first couple of years of its life. If you don’t plan to have this vehicle for a long time, or you’ll be changing it every couple of years, then you might be taking a loss by buying one brand new. Looking at a vehicle that’s a couple of years old means the previous owner has paid the depreciation, and it will likely be a much lower purchase price.
Your budget is always something you need to consider when buying a new vehicle; whether you’re paying cash or looking to finance, you will need to adhere to that budget. As mentioned before, with a used car, the previous owner has already paid the big price by purchasing brand new. With that depreciation hitting the most in the first few years – the price may be much closer to your budget and more reasonable.
Are you planning to finance the vehicle? Most people do not have the cash to buy one outright, so they will finance it, which can be a good option. When it comes to financing, there is usually quite a difference in new versus used vehicles. Depending on when you purchase, dealerships will often have promotions on brand new cars for zero, or close to zero, percent financing.
The financing rate for used cars is usually quite a bit higher, somewhere around 3% or 5%. So the cost of borrowing on new versus used vehicles may be something to consider when you’re financing your vehicle purchase.
Changes in Insurance
Even if you are buying the same vehicle you have, just a newer model, there will likely be changes in your insurance policy. Before you make any big decisions on a car, it's recommended to chat with your insurance broker or advisor to see how this new vehicle will change your insurance premiums and make sure it's affordable for you.
Buying a new vehicle is a very exciting time – especially if it's your first time purchasing a brand-new one. However, always keep in mind your budget, potential depreciation, and insurance options. Make sure it's the right choice for you once you have decided on purchasing your new, or new to you, vehicle – happy driving!
Are you planning a vehicle purchase and would like to know what your insurance rate is likely to be on a particular make and model? If so, contact us today to speak to one of our brokers.