Buy a brand new car or second-hand car? Which is better?

Posted by Fitz Villafuerte under Personal Finance on May 15, 2016

On buying a car, they say that you’ll lose money on depreciation when you buy a brand-new car while others say maintenance for a second-hand unit is more expensive. All things being equal, should I buy a brand-new car or a second-hand one?

Answer:

At first glance, it will seem that buying a pre-owned unit is more financially wise. Cars depreciate because they are used a lot and that can be a disadvantage to you, financially speaking.

If you are buying the unit in cash, then a pre-owned unit makes more financial sense.

If you are buying it through an auto-loan facility, you can go for either one, but I will personally go with a brand-new one since I don’t want to risk the problems associated with a pre-owned unit unless I get substantially big savings … but that’s just me.

I would like to advise, however, that not all decisions can be based on a cost-benefit analysis.

If buying a car is an important need and the car is a tool of the trade that will make your daily life more convenient, or even allow you to earn more income, then go buy a new car.

The bigger issue is whether you have the budget for one. If by buying the car, you will not be able to finance other needs, be forced to cut down on basic necessities or be prevented from achieving more important goals, then I would strongly suggest that you defer your decision until you have enough funds.




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