Is it better to buy new or used cars?

Buying a new car is a big decision. First you have to figure out where and how much you’ll be driving. Then you have to decide on a make and model. Even then you have to decide whether you’re interested in a new or used car. Though a new car is less likely to come with problems, it’s still important to carefully consider all of your options, because pre-owned cars may come with some unexpected perks.

One thing you may not realize about buying new cars is that they begin to depreciate in value the moment you drive off of the lot. In fact, your car’s value can depreciate as much as 20% by the time you finish signing the paperwork. Over the course of your car’s lifetime, it will only continue to depreciate. By the end of its first year off the lot, for example, it can lose as much as 30% of its value. This doesn’t mean anything for the performance of your vehicle, but it’s definitely something to keep in mind when it comes time to trade in or sell down the road.

This isn’t to say buying a new car is unilaterally a bad decision. New cars are just about always guaranteed to come with the latest technology and safety features, and you can also make sure you’re getting the exact model, color, and features you want. Plus, since they’re coming straight from the manufacturer, you won’t have to worry about taking it off the lot for a pre-purchase inspection. For these reasons, shopping for new cars tends to be easier.

One additional thing to consider is financing. Between incentives like rebates and sales and some good old-fashioned negotiation, you’ll almost certainly pay less than the sticker price for a new vehicle. Plus, there are more financing options—and better interest rates—with a new car than there are with used cars. If you can afford a new car and know this is the right decision for you, there’s no reason not to buy new.

However, if you’re not totally sold on a new car and are open to some short- and long-term savings, you might want to consider a pre-owned vehicle. The good news is that most used cars no longer match the clunky, outdated stereotypes. Vehicles are more dependable than ever these days, meaning you may not need to worry about repairs for a long time. Plus, with all of those up-front savings, you may even be able to buy a nicer vehicle than you initially planned.

One other thing to think about is insurance. You’ll generally pay less to insure used vehicles because they’re simply not as expensive as a new car. However, an insurance comparison site like Otto can help you compare companies and policies from all over and even alert you to discounts you didn’t know you could get to ensure you’re getting the best rate.