The Price Comparison of Pre-Owned Cars vs New Cars

Posted Thursday, Sep 14, 2023

 

Buying a new or a used car is a major decision that involves many factors, such as your budget, preferences, needs, and lifestyle. Both options have their pros and cons, and the best choice depends on your situation and goals.

One of the most important factors to consider when buying a car is the cost. In this article, we will compare used vs new vehicles in terms of upfront cost, depreciation, and repairs.  We will also provide some tips on how to negotiate the best price on a used vehicle.

1. Upfront Cost

Upfront cost considerations when buying a used vs new car are mainly related to the purchase price, the fees, and the taxes of the vehicle. According to online sources, the average new car costs more than $40,000 while the average used car costs closer to $25,000. However, this gap may vary depending on the make, model, year, condition, and mileage of the car.

Some of the fees and taxes that are included in the upfront cost are:

• Sales tax: This is a percentage of the purchase price paid to the state or local government. The sales tax rate may differ depending on where you buy and register the car. Generally, new cars have higher sales tax than used cars because they have higher purchase prices.
• Registration fee: This is a fee paid to the state or local government to register the car and get a license plate. The registration fee may depend on factors such as the weight, age, and value of the car. Usually, new cars have higher registration fees than used cars because they have higher values.
• Title fee: This is a fee paid to transfer the ownership of the car from the seller to the buyer. The title fee may vary depending on the state or local government. Typically, new cars have lower title fees than used cars because they have fewer previous owners.
• Documentation fee: This is a fee that the dealer or seller charges to prepare and process the paperwork for the sale. The documentation fee may range from $100 to $500 or more, depending on the dealer or seller. Both new and used cars may have documentation fees, but they may be negotiable.
• Destination fee: This fee is charged by the manufacturer to deliver the car from the factory to the dealer. The destination fee may range from $500 to $1,000 or more, depending on the manufacturer and model. Only new cars have destination fees, and they are usually not negotiable.

2. Depreciation

Depreciation is the difference between the value of the car when you buy it and when you sell it. A new car loses about 20% of its value as soon as you drive it off the lot and another 10% in the first year. A used car depreciates less, so you can save money by buying a car that is three years old or older.

3. Repairs and Maintenance

Repairs and maintenance cost considerations of used vs new vehicles are mainly related to the frequency and expense of fixing and servicing the car over time. Generally speaking, new vehicles tend to have lower repair and maintenance costs than used vehicles, especially in the first few years of ownership. However, this may vary depending on the make, model, condition, mileage, and history of the vehicle.

Additionally, a new car has a warranty and no history of accidents or damage, so you can have peace of mind that it will be reliable. On the other hand, a used car may have some wear and tear, but you can check its condition by getting a vehicle history report and a mechanic’s inspection before buying it.

On average, a new car’s routine maintenance and repairs could cost about $0.09 per mile. This includes things like oil changes, tire rotations, brake pads, spark plugs, and filters. However, as the car ages, the repair and maintenance costs may increase due to wear and tear, breakdowns, or recalls.

Better Ways to Negotiate the Price for a Used Vehicle?

Negotiating the price of a used car can be tricky, but there are some general steps you can follow to get the best deal possible.

1. Know the Current Value of the Car

Before you start negotiating, you should know the current market value of the car you want to buy. You can use online pricing guides such as Edmunds or Kelley Blue Book to get an estimate of what other buyers have paid for that used car. You should also check the vehicle history report and the OBD system for any issues or problems with the car.

2. Make the Right Offer

When you make your first offer, you should start low – but not too low. A good rule of thumb is to offer 10% to 15% below the asking price, depending on the condition and popularity of the car. This will give you some room to negotiate and show the seller that you are serious and informed.

You should sweeten the deal by offering a counteroffer. Increase your offer by small increments, such as $100 or $200, until you reach a price that both parties can agree on. You can also use other factors, such as trade-in value, financing options, or warranty coverage, to make your offer more attractive.

3. Review Before Closing the Deal

You should review the numbers and all the terms before you close a deal. Make sure you understand the final price, the fees, the taxes, and the payment method. You should also get a written bill of sale that outlines all the details of the transaction.

When you ink the deal, you should make sure you have all the right documents before you pay. You should get the title, the registration, and the keys from the seller. You should also transfer the ownership to your name as soon as possible.

Final Word

Buying a new car vs a used car depends on your personal preferences and budget. A new car offers more advantages in terms of depreciation, financing, reliability, and technology, but it also costs more upfront and overtime.

A used car offers more savings in terms of depreciation and purchase price, but it also has more risks in terms of financing, reliability, and technology. If you want the best deal on used cars, you should visit Auto Tech.