When shopping for a new car, encountering dealers that offer incentives for certified used and pre-owned vehicles can be common. These cars can be as reliable as new cars, but may not include many of the options of vehicles from more current model years. When comparing the difference between a certified used vehicle and buying a new vehicle, first ask yourself what kind of options you desire.
Benefits of Disadvantages of Certified Used and Pre-Owned Vehicles
Certified used and pre-owned vehicles may be one to two years old and still feature the original warranty at a much lower price. While a new car won't have much mileage on its odometer, some used cars may not bear excessive wear and tear. Some models are driven below 10,000 and 20,000 miles before they're turned in by the previous owner. Like all used cars, certified used and pre-owned models are susceptible to the reliability issues of older cars. Even with a positive vehicle history report, the rating system may not dictate how the original driver treated and maintained the car.
Benefits and Disadvantages of New Cars
New cars will have the latest safety requirements for their model year. From year-to-year, the National Highway Traffic Safety Administration (NHTSA) and Insurance Institute for Highway Safety (IIHS) update the standards for their safety tests. Because newer cars need to comply with these more rigorous standards, a car from previous years may not feature a safety rating as high as a current model. New cars depreciate quickly once driven off the dealer’s lot. In one minute a car may lose 9 percent of its value. By the time your new car is five years old, its value may have depreciated by more than 60 percent (Edmunds, 2010).
Warranties and Extended Service Contracts
Warranties and extended service contracts cover repairs and maintenance for a limited amount of time, and are most often included in the price of a new car. Extended service contracts are tacked onto a car’s price as an added incentive, and may be purchased separately from the vehicle. Depending on the age of your certified used or pre-owned car, the warranty may be the remainder from the previous owner’s contract. When determining the benefits of buying a certified used vehicle, account for the costs involved with additional incentives.