Buying new versus buying used should be based on how much of an informed shopper you are. With todays information age at our fingertips, there should be no reason for you to purchase a car that will not meet your needs. There are several things to consider when buying cars. We can break down the pros of buying both new and used cars.

BUYING USED

1) The rule of thumb is to buy a car as it hits the 3 year mark. The advantage to this is that the maximum depreciation you are paying has passed and starting to level out. Depreciation is the amount of value your asset loses over time. Believe it or not almost everything has a depreciation value. By buying used you save on depreciation. It's true once you take a new car of the lot the value drops. So the smart thing to do is let someone else pay the depreciation for the first three years. If you follow this small bit of advice you can enjoy nicer cars than you would if they were new.

2) You can rotate cars more often. By buying used you will have a trade in value that is closer to the price you paid for the car. Of course, this is contingent on the make of the vehicle (ie. Honda vs. Hyndai). But in general you should be able to minimize the amount of money you pay to trade up to a new car.

3) Buying a new car generally will get you a nicer car. For example would you want to drive the latest 2007 Mitsubishi Gallant or a 2004 BMW? By following this simple rule of thumb you are guaranteeing yourself a decent reliable car. Now don't just buy any luxury car either. Take a look at miles and the condition as well as preventative maintenance.

BUYING NEW

1) New cars have longer warranties. You generally get better peace of mind by buying a new vehicle. Instead of a 3,000 mile warranty and/or 30 days you typically will get something like 3-4 years and/or 50,000-60,000 miles on a new car warranty.

2) The car just plain looks nicer There is a deeply satisfying feeling when purchasing a new car. The smell, the look, the feel, all those can be crucial as to why people buy new cars. Psychology can play a big part in the decision to buy new rather than used. I've purchased both and it is nice to buy a new car, much nicer knowing you are the first owner. However, as I got older I realized it feels much better to know you have saved money by purchasing a used vehicle.

3) Free maintenance such as oil changes are great. These can be available on used cars but typically are only available on used autos. Oil changes every 4,000 miles are pretty much necessary. It was super nice when I went to pay for these and all I had to do was sign on the bottom. No payment required.

My opinion is that you should buy used, however I do understand that new cars are fun to own. What you really need to ask yourself is how important is it to save money. Not necessarily right away, but more like an investment, over time. I'm a frugal guy. I clip coupons. I contribute to my 401K. Every little bit adds to the bottom line. Car purchases are good investment only if they are used and they have good resale value. I own a recent Honda Accord, not new but not old.

Learn more about this author, Erik M. Dell.
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