Are you thinking about buying new or used for your next vehicle? New cars have all the latest and greatest options—but according to current depreciation rates, a new vehicle’s value can drop by more than 20 percent after the first 12 months of ownership and only goes down from there.1 The price tag for an older model (5+ years old) may be significantly lower, but you could end up with expensive repairs. That’s why choosing a late-model used car—a vehicle that’s comparable to the current-year model but not brand new—can be such an attractive option.
Two- and three-year-old vehicles are often the best value, according to Consumer Reports.2 In fact, shoppers can save more than $14,400, on average, by buying a three-year-old car instead of its new equivalent.3 Cost is certainly not the only factor driving your decision to buy new or used. If you spend a lot of time on the road, having a reliable and fuel-efficient vehicle may be your top priority. Or, you may be motivated to upgrade to a newer car equipped with the latest safety features. The key is to buy a car that will serve you well for a number of years so you can get the most out of your investment.
If you decide to shop for a used vehicle, it’s important to be thorough with your research before making a decision. Many late-model used vehicles can be purchased with a warranty, which provides some protection should you need repairs. Still, there are some unknowns with buying a used vehicle (even if it’s “almost new”) because a car’s condition still depends on how it has been maintained and driven by others. These tips can help steer you in the right direction:
- Check for features. Does the car have the features you consider to be necessities? These might include good MPG, ample cargo space, safety features, Bluetooth connectivity and navigation.
- Estimate fair value. Kelley Blue Book® allows you to do side-by-side comparisons of different makes and models.
- Review the vehicle’s history. Learn as much as you can about past owners’ use and maintenance. Use the vehicle identification number (VIN) to investigate whether the car has been damaged in a flood or a crash. You can check the CARFAX® report.
- Compare warranty coverage and mileage. Find out if a used vehicle is still under warranty or if an extended warranty can be purchased.
- Get an inspection. Have the vehicle inspected by a professional mechanic. The mechanic should check the vehicle's frame, tires, airbags, undercarriage and engine.
- Take a test drive. Get behind the wheel and drive the vehicle you’re considering buying. Try accelerating onto a highway and see how the car handles on the road.
Need help with next steps? Navy Federal is here to guide you. Ask about auto loans for financing your new or used vehicle. View our auto rates and auto loan calculator, and learn more about our Auto Buying Program.
1Source: CARFAX: Car Depreciation: How Much Value Will a New Car Lose?
2Source: Consumer Reports. Used Car Buying Guide.
3Source: New York Times: Rising Car Prices Are Sending Even Strong-Credit Buyers to the Used Lot