Buying a New Car vs Used Car




Buying a New Car vs Used Car

Many of our thoughts on buying new vs used vehicles derive from things our parents taught us or own experiences in life.
The value of a new car depreciates the moment you drive it off the lot. It instantly becomes a used car, only worth what a dealer would pay or what a used car buyer would give you, rather than the retail price you just paid.
However, there are also benefits to buying new. Being the first owner, you generally don’t have to worry about mechanical issues in the first few years giving it higher reliability, a list of bells and whistles and new cars traditionally comes with better finance rates.
As far as used cars go, buying a newer version still offers many of the same safety features and warranties, while not having to pay the higher sticker price that comes with a new car.
In the past 18 months, the COVID-19 pandemic has created some negative impacts and issues for the car industry. There is currently a shortage of computer chips, keeping automakers from producing enough cars to meet the rising demand. That in turn increased the demand for used cars. Thinking back to your high school economics class, you can predict what happened next. Used car prices are now being sold high above their retail value and in some cases, at the same cost of brand-new vehicles, resulting in a rise in inflation.
In a post pandemic world, unemployment rates remain high across the country, but many consumers still have their stimulus funds that they are ready to spend. The demand for new vehicles is there, but not the supply.
On the other hand, those that don’t want to pay the higher car premiums are retaining their current vehicles, which is in turn increasing the demand for parts and service, one of the most profitable business sectors for car dealers.
Most buyers will have to wait it out a little longer. Supply and demand will eventually get back on track, but industry experts say it will be at least several more months.

Provident's Auto Loan experts are here to help guide you through the car buying process. To meet with an auto loan consultant, click the schedule appointment button below, call us at (800) 632-4600, or visit a local community branch.
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