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What to Consider When Buying a Car

When deciding between a new or used car, there are several factors to weigh. While used cars are often more affordable, it’s essential to consider various aspects to determine the best choice for you.

Questions to Ask Before Buying a Car

Whether you’re leaning towards a new or used car, consider these questions:

• What will your monthly car payment be, and can you afford it?
• What are the interest rates for financing? Compare the annual percentage rate (APR) for new and used car loans.
• How much will your car insurance premium be? Remember, financing may require additional coverage beyond state requirements.
• What are the maintenance and repair costs? Consider the upkeep expenses for the car.
• What features does the car offer? Decide if you prefer a new car with the latest features or a reliable used car.
• What is the car’s safety record?
• What is the car’s reputation? Check online reviews before making a purchase.

Pros and Cons of Buying a Used Car

Pros of Buying a Used Car

• Less expensive upfront: The average used car buyer paid $27,147 in June 2023, compared to $48,808 for a new car, according to Kelley Blue Book.
• Potentially lower car payment: Experian data shows the average monthly loan payment for a used vehicle was $516 in the first quarter of 2023, compared to $725 for a new vehicle.
• Possibly lower down payment: Edmunds reports the average down payment for a used car was $4,107 in the second quarter of 2023, compared to $6,823 for a new car.
• Availability of certified pre-owned vehicles: These are late-model used cars sold by franchised dealerships after rigorous inspections and reconditioning.

Cons of Buying a Used Car

• Higher interest rate on financing: The average APR for a 68.5-month used car loan was 11% in the second quarter of 2023, compared to 7.1% for a new car loan.
• Higher maintenance or repair costs: Used cars generally cost more to maintain and repair than new cars.
• Limited warranty: A used car may come with a shorter or less comprehensive warranty than a new car.
• Outdated features: Older cars may lack the latest features found in new models.

Pros and Cons of Buying a New Car

Pros of Buying a New Car

• Better condition: New cars typically have fewer problems and no history of poor maintenance.
• Lower interest rate on financing: New car loans often have lower interest rates, leading to significant savings over the loan’s life.
• Better warranty: New cars usually come with longer warranties, saving money on maintenance.
• Lower repair and maintenance costs: New cars generally have lower repair and maintenance costs.

Cons of Buying a New Car

• More expensive upfront: New cars come with a higher price tag.
• Faster depreciation: New cars lose a significant portion of their value within the first year.
• Higher sales taxes: The higher the car’s price, the more sales tax you’ll pay.
• Pricier car insurance: Insurance for new cars typically costs more due to higher repair costs.

The Bottom Line

Deciding between a new or used car involves considering factors like price, monthly payments, maintenance costs, and insurance premiums. Use tools like Experian’s car payment calculator to determine how much you can afford and make an informed decision.

For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you with confidence and expertise.

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