New vs. Used Cars: Pricing and Out-of-Town Buying Tips

When evaluating new vs. used car pricing, especially for out-of-town purchases, several key factors can shift what counts as the best deal, which can influence your decision. Sometimes, a slightly used car may offer better value, especially if purchased as a certified pre-owned (CPO) vehicle or from a private party with an extended warranty. For instance, buying a one-year-old CPO Volkswagen with low mileage could result in a longer warranty period compared to buying the same model new. The CPO warranty often extends the original new car warranty, giving you additional peace of mind.

Buying a well-maintained preowned vehicle, even outside of certified pre-owned (CPO) programs, can save you thousands of dollars compared to purchasing new. However, the key to maximizing these savings is ensuring the vehicle is not only competitively priced but also in good condition. Overlooking maintenance issues, such as worn brakes or tires, can quickly offset the initial savings, as these repairs can add significant costs. A thorough inspection and review of the cars service history are essential steps to avoid unexpected expenses and secure the best value for your investment.

The Pros and Cons of Buying New

Pros:

• Latest Technology:
  New cars come equipped with the most advanced tech, from cutting-edge safety features to improved fuel efficiency. For some buyers, this is a major draw.
• Known Vehicle History:
  Buying new means you’re the first owner, eliminating concerns about prior misuse or accidents.
• Warranty Protection:
  Most new cars come with comprehensive warranties, providing peace of mind for at least the first few years.

Cons:

• Higher Costs:
  New cars are significantly more expensive than used ones, not just in purchase price but also in insurance premiums.
• Rapid Depreciation:
  A new car typically loses a significant portion of its value the moment it’s driven off the lot.
• Dealer Fees and Add-Ons:
  New car purchases often come with high dealer fees and unnecessary add-ons that inflate the final price.
• New Model or Redesign: Buying a new to the market model or complete redesign can result in a car that is unreliable and ultimately has a greater amount of depreciation.  Try to avoid first model years if possible. 

The Pros and Cons of Buying Used

Pros:

• Lower Purchase Price:
  Used cars generally cost less than new ones, making them an attractive option for budget-conscious buyers.
• Less Depreciation:
  In many instances a used car has already experienced its steepest depreciation, so its value will hold steadier.
• Potentially Less Tech:
  For buyers seeking a more analog driving experience, older models may have simpler, more intuitive controls.
• Greater Availability of Certain Models:
  If you prefer a model that’s no longer made or dislike the latest redesign, the used market offers more choices.

Cons:

• Unknown History:
  Even with vehicle history reports, you may not know everything about how a used car was treated by its previous owner.
• Fewer Advanced Features:
  Depending on the car’s age, it may lack modern safety or convenience technology.
• Maintenance Costs:
  While cheaper upfront, used cars may require more frequent repairs or maintenance, especially if not properly cared for.  For this reason alone, a thorough pre purchase inspection can be vital.

How New vs Used Car Pricing Affects Your Deal

Pre-Owned Pricing Trends

The pricing abnormalities caused by the COVID-19 pandemic are finally receding, and preowned car prices are returning closer to historical norms. This means depreciation is once again a factor in pricing and can make slightly used cars a great value. Buying a 1-5-year-old preowned vehicle can often save buyers thousands of dollars compared to new models. Additionally, opting for a preowned car can provide access to specific features or configurations that may not be immediately available in new inventory due to supply chain delays or limited production.

Manufacturer Incentives

New cars often come with manufacturer incentives such as rebates or reduced financing rates. These offers can make buying new more affordable than expected, sometimes even undercutting the cost of 1-3-year-old used models.  When contemplating new/preowned, it is vital to check for available rebates on new cars.

Dealer Discounts

Dealerships sometimes need to clear inventory, especially if a car has been sitting on the lot too long. These situations can lead to steep discounts, as dealers aim to minimize holding costs or avoid sending vehicles to auction. Knowing how long a car has been in inventory is a crucial factor in negotiations. Use tools like vehicle history reports to check the car’s listing date and gauge how motivated the dealer might be to sell.  If a preowned car has been unsold for a month or more, or a new model for more than 60-90 days, the dealer might be more willing to negotiate.

Exploring Out-of-Town Purchases

If you’re not finding what you need locally, especially on preowned cars, expanding your search radius can open new opportunities. Road trips to purchase a vehicle can save thousands of dollars and offer access to cars with specific features or configurations not available nearby.

When looking for certain options/features on a preowned vehicle that also matches your budget, mileage requirements and condition, expanding your geographic search area is often a must.  Buying cars far from home is very doable, but extra research and resources often need to be utilized to ensure you are getting a well-maintained car that will meet your expectations. 

Why Research is Crucial

To truly understand new vs used car pricing, research tools and local market variations play a crucial role Whether you’re buying new or used, thorough research is key. Here’s why:

• Avoiding Pitfalls with Used Cars:
  Used cars can hide their wear and tear well in photos. For example, we once evaluated a low-mileage Jeep Wrangler that looked great online. Upon closer inspection, it became clear the car had been neglected, ridden hard, and poorly maintained. Proper research and upfront questioning of the seller can save time, money, and frustration.
• Finding Pricing Opportunities with New Cars:
  While new cars are often pricier, certain situations can make them the better option. For instance, we recently helped a client interested in a preowned 2023-2024 Jeep Grand Cherokee Limited. While preowned options initially seemed cheaper, further investigation revealed large manufacturer rebates on new models.  Additionally, there was a lot of inventory sitting on lots for over 90 days. These rebates, combined with dealer motivation to avoid loan interest on aging inventory, made new models more affordable than used ones in this case.

Lesson: Always compare pricing for new and used models before committing.

Market Variations

Different markets often have unique pricing dynamics. For example, a convertible may be more affordable in colder regions during winter months. Similarly, high-volume dealerships in urban areas might offer better deals compared to rural locations. However, be prepared for the challenges that come with long-distance purchases.

Pricing Pitfalls

Some regions have varying practices regarding destination fees and processing charges. For example, in Pennsylvania, dealers typically include the destination fee in the listed price and charge moderate processing fees. In other areas, these fees might be hidden or inflated, significantly altering the final cost. Always ask for an out-the-door (OTD) price to get the full picture.

Rebate Clarity

Be cautious of advertised prices that include rebates for which you don’t qualify. Some rebates target specific groups or conditions, such as military service or financing through a specific bank. Verify all rebates and discounts before making travel plans.

Tips for Securing the Best Deal

• Ask for OTD Pricing: Ensure you know the exact total cost, including fees, taxes, and add-ons. This avoids surprises and helps you compare deals accurately.
• Use Manufacturer Programs: Brands like Jeep sometimes have special pricing through programs like Tread Lightly. A small membership fee can result in significant savings, often below invoice price.
• Leverage Forums: Online communities dedicated to specific makes and models can provide insights into regional pricing trends, incentives, and negotiating tips. Be cautious, though, as some posts may exaggerate claims.
• Contact Multiple Dealerships: Call or email dealerships within your expanded search area and ask for their best OTD price. Comparing multiple offers ensures you’re making an informed decision.  This tactic is mostly for new cars at it gets harder to find comparable preowned models are multiple dealerships. 
• Understand Preowned Pricing: When shopping for a preowned car, it’s essential to understand its value thoroughly. Use trusted online pricing tools to determine both the fair retail price and the trade-in value. Knowing the trade-in value provides insight into what the dealer likely paid for the vehicle, giving you a stronger negotiating position. Additionally, research comparable vehicles in your area to understand market demand and pricing trends. This knowledge empowers you to negotiate effectively and increases your chances of securing a fair deal.

Key Takeaways: New vs. Used

• New Cars Are Ideal If:
  • You want the latest features and a more worry-free ownership experience.
  • You prefer to create your vehicle’s history.
  • Incentives, such as rebates, make new models competitively priced.
• Used Cars Are Ideal If:
  • You’re looking to save money upfront.
  • You prefer a specific older design or feature set.
  • Depreciation is a major concern.

Professional Assistance

Navigating the complexities of pricing, incentives, and long-distance purchases can be overwhelming. That’s where My Car Insight comes in. Our experts handle the research, negotiations, and logistics, ensuring you find a fair deal whether it’s local or across the country. We also provide guidance on navigating dealer fees and spotting potential red flags.

Buying a car is a significant decision, but with the right strategy and professional assistance, you can save money and drive away happy. Let My Car Insight simplify the process and help you find your perfect vehicle.