New vs Used Car, Which Option Is Right for Me?

If you find yourself in need of a new vehicle, you are probably asking yourself many questions. You may be asking yourself if you would prefer a brand-new car, or a used, but new to you, car? Should you be getting a new car loan, or a used car loan? How much will you have to put down as a car down payment? If your purchase requires a loan, what should the terms be? A new car is a major financial decision that requires a lot of up-front research to come to the best decision for you and your unique financial situation.

Decide What Car Payment You Can Afford

Step one when purchasing a new vehicle should always be to determine what car payment you can afford on a monthly basis. New car payments and used car payments can vary greatly. The payment amount can vary greatly from person to person and you should always make sure that the final number is something that you and your family can afford without too much financial strain.

Figure Out How Long You Want to Finance Your Vehicle

When considering your options for a new or used car payment, another important step is to examine the different terms offered by your financial institution. In the first quarter of 2019, the average auto loan term was almost 69 months for new cars and nearly 65 months for used vehicles. Longer term loans generally have lower payments, but if you aren’t careful, you can end up owing more on your vehicle than it is worth.
Check out our auto loan calculator where you can try various combinations of payments and terms to settle on loan conditions that you will be happy with.

Do You Have to Put Money Down? 

Car down payments are often an area with a lot of questions. While a car down payment is not always required, not having one can impact the conditions of auto loans. Generally speaking, you should aim for no less than 20% down, particularly for new cars and no less than 10% down on used cars.

Choose A Vehicle That Will Last

It is always important to choose a vehicle that is dependable and in as great of condition as you can realistically afford. Choosing a car that is less money due to a few minor issues may seem like a good way to cut car payment costs but can end up costing you a lot more money in the long run. You could end up “upside down” with your car loan. Simply speaking, that means that you own more on your auto loan than your car is actually worth. It is best to do everything that you can to keep yourself out of this potentially costly mistake. Choosing a safe and reliable vehicle is important to you and your family’s safety, but also to your financial health.

Used Cars: Consider the Vehicle Year and Mileage

When purchasing a used car, it is important to know the vehicle year and mileage. The year the vehicle was manufactured can say a lot about the health of the vehicle. Were there any recalls on that particular model? Is it too old to be considered for financing? Mileage can also give you a good feel for back story on where the vehicle has been. Higher mileage cars can often come with wear and tear and parts that are on the edge of needing replacement. Older cars and higher mileage cars can save you money today but could cost you dearly in the long run.

New Cars: Consider the Monthly Payments and How Long It Will Take You to Pay It Off

Who doesn’t want a brand-new car? New cars can be bright and shiny and exciting, but there are pitfalls with them to consider as well. Often, you will need more financing, which can mean longer terms and higher monthly payments. Purchasing a brand-new vehicle can also cause you to lose money right off of the bat, as cars generally lose a chunk of their value the minute they are driven off of the car lot. Some of the benefits to brand new cars is that you will not be dealing with repairs in the near future and many times if you are facing repairs, they are covered by the warranty.

Consider an Auto Loan from Missouri Central Credit Union

Are you finally ready to ditch your old jalopy and take the steps to get on the road in a new car with better gas mileage and the latest technology? Consider an auto loan from Missouri Central Credit Union. Because we are a member owned not for profit institution, we are able to offer the lowest interest rates and highest approval rates around.

Contact Missouri Central Credit Union

Ready to apply for an auto loan or have questions about where to begin? Talk to a Member Service Representative at MCCU today.