Buying New vs. Used: Price Comparison and the New Car Premium

Along with the purchase of your home, buying a car will likely be one of the biggest purchases you make in your entire life. So it’s important to make it count, whether you’re shopping at a used Jeep dealership in Bridgeview, or still just researching online. One of the biggest decisions you’ll need to make as it relates to purchasing a car is whether you should buy a new or used vehicle.

Why is this decision so important? Put simply—because it could make a difference of several thousand dollars. On higher end cars, the difference could easily be ten thousand dollars or more. So while there are benefits and drawbacks to both, it’s a better value to buy a used car rather than a new one.

But don’t take our word for it. Before you head to a used Jeep dealership in Bridgeview, keep reading for a full comparison of buying a new car versus a used one.

Price Comparison: Buying New Versus Used

You may have heard that as soon as you drive a car off the lot, that vehicle starts to lose its value. Generally speaking, the higher the price of that car, the greater the degree of magnitude by which that car loses its value. In the context of new vs. used at a used Jeep dealership in Bridgeview, because the price is lower when you purchase a used car versus a new car, the used car’s price will have less room to fall.

This is true despite the fact that the used car’s utility value doesn’t actually go down. In other words, even though a used car isn’t any less useful than a new car (provided that the used car doesn’t have a ton of miles on it) it is a lot less expensive.

This means that when you buy a used car, you pay a lower price despite the fact that you’re getting the same value.

The New Car Premium

If it seems irrational that a used car can be priced much lower than a new car despite the used car being just as useful, it’s because it is. But that doesn’t mean it’s not true. People don’t buy things purely based on logic and rationale; they buy things that they want. And many people want a new car, even if it costs more despite being no less valuable than, say, a used Jeep at a dealership in Bridgeview.

We’ll call it “The New Car Premium,” because it’s the extra price you pay to have a new car. And this New Car Premium is not small. According to NerdWallet, the average American purchases 13 vehicles over the course of their life and each one costs, on average, $30,000. Yet if you purchased each of the 13 cars when they were 3 years old rather than new, you’d save almost $130,000. To put that in perspective, that’s more than enough money to put down on to buy a house near any of the used Jeep dealerships in Bridgeview.

The Case for the New Car

By now, it might seem like there’s no case at all to ever buy a new car. But that’s not entirely true. For example, if you can’t find a reputable used car dealership in Bridgeview or anywhere else nearby and you find an independent seller, buying used can be risky. An independent seller that you find on Craig’s List may not be upfront or transparent about the state of the car you’re buying. In that case, unless you know a lot about cars and how to make sure they’re in good repair, the lower price of that used car may not actually be a great value.

Still, the fact remains that if you are buying used from a reputable used Jeep dealership in Bridgeview, for example, then you can’t really make a rational argument against going with a used car.

Buy a Certified Pre-Owned Car with Confidence

At many dealerships, you’ll likely find that they have certified pre-owned cars. What this means is that these cars have been used but they’ve also been inspected and certified by either a manufacturer or another type of certifying authority. In effect, this means that when you buy a certified pre-owned car, you can make the purchase with confidence knowing that the used car you’re buying has gotten the seal of approval from experts.

In many cases, a certified pre-owned car will come with a warranty and it may be available with special financing or other offers to make the process of purchasing a used car even easier.

Stick With Used Cars

Unless it’s truly worth it to you, and you have the money, there’s really no need to buy a new car. You’ll easily pay double what you would with a used car, and aren’t there better things to spend your money on?