Pros and Cons

A used car can be a smart financial choice as long as you do your due diligence to increase your chances of driving off in a winner and not a clunker. Not sure if a used car is your best option? Consider these pros and cons:

Pros of Buying a Used Car

  • Someone else has paid the depreciation. A new car depreciates, or loses value, the second you drive it off the lot. Edmunds, an automotive expert, estimates that new cars lose 15 to 25 percent of their value every year during the first five years of ownership. The lower sales price of a used car takes this annual depreciation into account.
  • Used cars cost less. The price difference between a new car in 2013 and a five-year-old used car of the same make and model was about $20,000, according to If you need to finance a loan, you should be able to make a smaller down payment and borrow a smaller amount.
  • You can afford a higher-end automobile. A higher-end car with some miles and years on it could fit your budget.
  • The car might still be under warranty. In addition, many dealerships sell certified, pre-owned vehicles. These used cars undergo a mechanic’s inspection and often come with an extended warranty. 

Cons of Buying a Used Car

  • The interest rate on used car loans tends to be higher. The difference isn’t substantial, though. It’s usually a percentage point or less.
  • You may be stuck with a car that has problems. If the previous car owner didn’t keep up with maintenance or had shoddy repair work done on the vehicle, there isn’t much you can do once you buy except pay to fix the problems.
  • The car may be out of warranty. Older cars tend to need more upkeep due to years of wear and tear. Without a warranty, you could be on the hook for some costly repairs. 

Dealer or Private Seller

You can buy a used vehicle from a dealership or directly through a private seller. Both sales options have pluses and minuses.

Pros of Buying Through a Dealership

  • You’re less likely to end up with a problem car. Used car dealers must abide by Federal Trade Commission rules as well as state regulations governing how they operate and sell vehicles. Most dealers inspect used cars for major defects or problems before putting them up for sale. If a problem arises after you buy, you can always go back to the dealer. Because dealerships don’t want to earn a community or online reputation for selling shoddy cars, they’re careful about what goes on their lots.
  • You may be able to get a warranty. Certified, Pre-Owned vehicles often come with an extended warranty. Vehicles considered Certified, Pre-Owned are typically under five years old and have less than 100,000 miles on them.
  • You have more finance options. You can shop around for a more competitive interest rate, including discussing car loan options with a loan officer at your credit union, dealer or other financial institution.
  • The dealer handles most of the paperwork. Dealerships usually assist car buyers with the titling and registration process. 

Cons of Buying Through a Dealership

  • You may pay more. A dealer has more costs to recoup than a private seller, including the mechanic’s inspection, sales commission, advertising and administrative costs. For these reasons, used vehicles sold by dealers often cost slightly more than those sold by individuals.

Pros of Buying Through a Private Seller

  • You have more opportunity to negotiate. A motivated seller is often willing to take a reasonable offer, even one that is lower than the original asking price.
  • You may pay less. There are no dealership markups or hidden fees when you buy directly from an individual.

Cons of Buying Through a Private Seller

  • You may be dealing with a stranger. Even after running a vehicle history check and having a mechanic look over the car, you might not discover problems until after money has exchanged hands. By then, the car is your problem.
  • No warranty. Most vehicles are sold “as is.” However, you might be able to transfer the original or extended warranty.
  • The seller might want cash. You can’t trade in another vehicle when working with a private seller. If you don’t have as much cash on hand as the seller wants, you can take out a car loan through lenders like your credit union or bank. 
  • You’re in charge of the paperwork. It’s up to you to handle registration, license plates, title transfers and other documents. 

Should I Buy New or Used?

Section Complete! Here's how you did: