20 or more years ago, the decision of whether to buy a new or used car was fairly easy. New cars were, after all, new. This meant that they were more reliable because all of the parts on them were new. Most new cars came with a warranty that covered pretty much everything on the car for at least the first two years.
Buying a used car, on the other hand, was almost like going to Las Vegas and pulling the lever on a slot machine. Sometimes you came up with three cherries and a very dependable car. Often, you came up empty-handed and you inherited the problems from the previous owner. The buying experience was also different. Instead of looking at the gleaming new models in the dealer’s showroom, you were forced to shop on small open-air lots from salespeople that knew little about their inventories other than “she runs great” or “this one’s real cream puff”.
How Times Have Changed!
Since the early 90’s, car dealers as well as manufacturers have recognized the importance of the used vehicle market. Dealers have gotten into the game because used cars represent another profit source for the dealership. Beginning in the early 1990’s with the luxury brands, manufacturers jumped into the market with certified used vehicle programs for low-mileage vehicles (including off-lease vehicles) that also helps bolster the resale value of their cars and raise their residual values, thus lowering lease payments for the new models.
Did I mention certified programs? Oh yeah! Certification involves a lease turn-in or other recent vehicle that falls within the manufacturer’s guidelines. Once the car has been inspected, the dealer can place a warranty on it that essentially extends the new car warranty for up to 7 years or 100,000 miles, depending on the vehicle and the manufacturer.
Other forces have also come together to change the used car market. The internet, for one, lets you choose vehicles from practically any dealer in the United States. Not enough Honda Insights in your state? Check out California! No black Cadillac Escalades in New Jersey? Check out Texas! The issue of vehicle history has also been addressed. Remember the salesman that knew nothing about the car? Companies such as Carfax and Consumer Guide will, for a fee, furnish you with a vehicle history that includes an accident check, mileage accuracy check and warranty check along with vehicle history details. Carfax will even guarantee a clean title for a year.
Finally, the cars, themselves, have changed. Build quality has improved greatly so that 100,000 mile cars, with the proper maintenance, still drive well mechanically and advances in corrosion resistance mean that the car body is still structurally sound. Even 200,000 miles on a vehicle does not necessarily classify it as a junker as would be the case 20 years ago.
Weigh the pros and cons
So what should you do? That depends on what you are looking for. A new car is still a new car (am I repeating myself?). A new car will have a warranty. All the parts and vehicle systems will be new and, therefore, not prone to break as easily as on a used vehicle. The tires are new, the carpets are new and the technology (safety systems, audio systems, etc.) is new.
Used cars, on the other hand, benefit from the increase in quality that all manufacturers are focusing on. Since a car depreciates in value, and a higher percentage of that depreciation occurs in the first few years, the price you pay for a newer used car will be a much better value than a comparable new car.
The bottom line is that in terms of value, buying a used car is much less of a gamble, and a much more viable alternative, than it used to be.
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