New or Used? How to Decide Which Car Option Is Right for You

New or Used? How to Decide Which Car Option is Right for You.

By Navy Federal May 5, 2015

When it comes time to buy a new vehicle, you'll need to decide: Brand new or new to you? The questions below can help you decide whether a new or used car is the better option.

Question 1 of 6

On average, cars lose about 20 to 30 percent of their value in the first year and 15 percent each year after. This loss is called depreciation. What's your view on depreciation?

Question 2 of 6

What do you think about warranty protection?

Question 3 of 6

Do you want specific colors or options?

Question 4 of 6

What are your thoughts about fuel efficiency?

Question 5 of 6

How much do insurance rates matter to you?

Question 6 of 6

How long do you plan to drive the car?

Consider ... a new car!

A new car can offer you the widest selection, best warranty and improved fuel efficiency, making it a smart choice based on your preferences. Although new cars depreciate faster and generally come with higher insurance rates than used cars, they can withstand higher mileage and are considered a better choice for people who will exceed the average duration of ownership (more than four to six years).

Consider ... a certified pre-owned car!

A certified pre-owned (CPO) car is a used car that's been inspected and certified by the car manufacturer, and includes warranty coverage. CPO cars tend to be more expensive than uncertified used cars, but depending on the automaker, cars are only eligible for certification if they're less than four to six years old, with a maximum of 50,000 to 80,000 miles. For people who value the security of a warranty and reliability of newer cars, but also want a good deal and selection, CPO cars offer the best of both worlds.

Consider ... a used car!

Not only do used cars cost less than new ones, but they also generally have taken the biggest depreciation hit already and are typically less expensive to insure. If you're comfortable with maintaining a car and not especially particular about colors and options, a used car may be a smart choice for you.

Whether you choose new or used, don't wait until you're at the dealership to start the conversation on financing. Talk to your credit union or financial institution about getting pre—approved for financing before you visit the dealership. If you prefer a no-hassle car-buying experience, consider Navy Federal's Auto Buying Program. It can help you save! With a nationwide network of dealerships and established program pricing, you'll drive away with the best price and car loan available.

This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.