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Pros & Cons of Buying a New Car: Is Buying a New Car Really Worth It?

Thinking about buying a new car, but not sure if it's worth it? CU SoCal explains everything you need to know about the pros and cons of buying new cars!
Buying a new car feels great and you’ll have the peace of mind of reliability. The benefits of buying a brand new car include the latest safety and fuel efficiency technologies, such navigation systems, collision detection sensors, electric engines, etc.
However, all these technological goodies come at cost. That’s why many individuals purchase used or certified pre-owned cars instead, as they can be a reliable option and far less expensive.
Read on for details on how to choose the option that’s right for you.
Credit Union of Southern California (CU SoCal) is one of the fastest growing credit unions in Southern California, providing checking, savings, and loan products with quick pre-approvals, no application or funding fees, and other great member benefits.
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Advantages of Buying a New Car

There are several significant benefits of buying a brand new car:
Reliability: What you see is what you get. Reliability is one of the perks of buying a new car because you will be the first owner. A brand new car offers peace of mind and a sense of security. There’s no need to worry about hidden flaws, plus the car will typically come with a three-year, 36,000 mile warranty.
It's Easier: Buying a new car is easier than buying a used car. Just determine the make and model you want and start shopping. The process for getting a loan, and registering the vehicle are easy.
New Car Deals: Year-end sales events, three-day holiday weekends, and the end of each month have traditionally been the best times to get great deals on a new car. These are the times when dealers look to clear inventory and meet sales quotas. For more details on when to buy, read When is the Best Time to Buy a Car?
Better Financing Options: Dealers know that everyone loves a new car, plus they have sales quotas to meet. For these reasons you may find dealer incentives on new car loan financing and benefit from a low or zero percent interest rate/APR. Credit Unions, including CU SoCal, also offer affordable car loans.
Higher Safety Standards: New cars will have all of the newest safety features, such as blind spot alerts, automatic emergency braking systems, 360 degree safety view cameras, stolen vehicle tracking software, and more.
Latest Technology: This includes higher fuel efficiency, lower emissions, wireless smartphone charging and connectivity, and more.

Disadvantages of Buying a New Car

While it feels good to drive away in a brand new car, one of the cons of buying a new car is that they typically cost more than used cars, depending on the make, model and features you choose. You’ll pay more to have the latest technology and safety features. Buying a car that’s one or two years old can still get you some of these perks at a lower cost.

Here are the main disadvantages of buying a new car:

Depreciation: According to industry experts, the value of a new vehicle drops by about 20% in the first year of ownership. Over the next four years, you can expect your car to lose roughly 15% of its value each year – meaning the average car will be worth just 40% of its purchase price after five years. How much a vehicle depreciates varies based on brand, type of vehicle, how many miles it’s been driven, and other factors.
Cost: The initial cost of a new car is typically higher than that of a used car. With a used car you’ll pay less because the car has already depreciated in value. Buying used can save you money because the previous owner already paid for the depreciation loss.
Insurance: Auto insurance for new cars can be expensive because of the comprehensive and collision coverage required by lenders. This average annual cost is nearly double that of liability alone. This car insurance is so expensive because of the cost of repairs or replacement if stolen. Even if your car is older and paid for, insurance can be higher when you carry full coverage to cover an accident or theft.

Is it Worth it to Buy a New Car?

Given the high initial cost of purchasing a new car (vs. a used car) and depreciation, purchasing new can still be a good option. If you know you’ll be keeping the car for many years, then it pays to purchase new.
According to Consumer Reports, many dealers are offering zero percent interest incentives.
Alain Nana Sinkam, TrueCars’ vice president of strategic initiatives, says that consumers who take out zero interest loans on new cars can come out ahead if they invest the money they would have spent on interest payments into something that could gain interest, or into something like a mortgage that would lower financial liability.
“A savvy and engaged consumer would take the zero percent, 84-month loan and siphon the monthly savings into an investment,” he says.

Other Car Buying Options

In addition to buying a new car, there are several other options that can be cost-effective and meet your driving needs:
Used: A used car (also called pre-owned) is one that has already been owned and driven. Used cars can be purchased from a car dealership or from an individual who is the owner of the car. When you purchase a used car from a dealership, it comes with less risk than buying from an individual, because the dealer has given it a thorough inspection and made repairs prior to offering it for sale. Some dealers will offer a warranty and some will be selling vehicles as-is. The Federal Trade Commission’s (FTC) Used Car Rule requires dealers to display a Buyers Guide in every used car they offer for sale, and to give it to buyers after the sale.
Certified Pre-Owned (CPO): For this answer, we turn to, which explains that “a CPO car is one that is previously owned, usually with no more than 60,000 to 80,000 miles and no older than five to seven years. (The time and mileage warranties vary by manufacturer.) CPO cars are backed by the original manufacturer, subjected to a rigorous, multi-point inspection and come with an extended warranty from the original date of service good at any dealer in the country.”
Lease: Leased vehicles are typically new and offered by all dealerships. A new car can be purchased or leased. A lease simply refers to the terms of the transaction. Leasing means taking possession of the car for a short, fixed period of time. You’ll make fixed monthly payments based on the loan interest rate you received. The main difference between leasing and purchasing is that when you purchase a car it becomes fully yours once the loan is paid in full. With a lease, when the term of use ends, the vehicle must either be returned to the leasing company or purchased for its residual value.

Why Savvy Consumers Choose CU SoCal

For over 60 years, Credit Union of Southern California has been proudly serving the Southern California community. We provide our Members with checking, savings, personal loans, auto loans, and other loan products with quick pre-approvals, no application or funding fees, and other unique advantages.
We are known throughout the area for our excellent member service and we are proud to be serving the community where we work and live.

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Please give us a call today at 866.287.6225 to schedule a no-obligation consultation with one of our auto loan experts.

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Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


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