If you live on a budget and are in need of a good, reliable vehicle, you may be debating whether to buy a new or used car. This is a big decision, and neither option is wrong; however, there are several factors you may want to compare before you decide which route to take. Here are three factors you should look into as you make this decision.
Price And Payment Amount
Overall, new cars do cost more than used cars, but it really depends on what you choose. For example, a two-year old luxury car may cost more than a brand-new economy car, so before you decide which type to choose, you may want to determine the maximum amount of money you would like to spend on this purchase.
One way to do this is by determining how much you can afford to pay for your car payment each month. Once you decide how much you can afford per month, you could work with a car payment calculator to find out how much the maximum amount you should borrow is.
Interest Rate
A second factor to consider is the interest rate you will pay on the car you purchase. It is very common for interest rates to be much higher on used vehicles than on new ones. This is primarily because lenders assume more risk when they loan money on used vehicles. This factor could also influence the amount you can spend on a car.
For example, if you buy a new car for $20,000 with an interest rate of 3%, you will have to make 48 payments, which will be around $442 per month. A used car with the same price and same number of months may have an 8% interest rate, which would make your payments around $488 per month.
Warranty On The Vehicle
Finally, you should compare the differences in warranties on new and used vehicles. New vehicles often come with warranties that cover all types of problems, while used vehicles may only have limited warranty coverage. The length of the warranties might also be different with new and used vehicles.
One nice part of having a full-coverage warranty is it eliminates the possibility of unexpected car repair bills, and this is really nice if you want to stick with your budget.
There are numerous factors to consider when purchasing a new or used vehicle, and it is always good to shop around to see what is available before you decide. To learn more, visit car dealers in your area today.
