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Should I Buy a New or Used Car?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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You need a car, and the new cars you see look beautiful. They’re clean, smell nice and have every latest gadget and technological advancement. You figure a new car won’t break down, and it comes with a warranty and the option of a service contract. It’s so easy to go to a new car lot and sign on the line for the car you want.

On the other hand, you can get a used car for less, and drive it for years to come. But you dread haggling with the owner or you’re leery of a used car’s questionable history. If you hate to part with more money than you have to, you may agree with author and consumer advocate Beverly Harzog who said, “I have a visceral reaction to buying a new car.” Buying this year’s model may feel like an extravagant waste of money.

So which is better, a new car or a used one? It depends on you and your situation. Before you decide to buy a car, make sure you understand the advantages and disadvantages of buying new or used. Just as importantly, be sure you know why you are buying a car, what you want and need from it and what you can afford.

What are the advantages of buying a new car?

New cars have some advantages, which can sometimes make them worth the higher price tag, an average of $37,169, according to Kelley Blue Book, nearly twice as much as the average used car price of $20,247.

New cars offer the latest styling, technology and safety features

Car models tend to go four to six years between major redesigns. It can be difficult to tell this year’s model from last year’s, or even one from several years ago. If you’re a car aficionado and you want the look of the newest model, however, you may not mind paying for it.

Technological and safety features have made big strides in recent years. Heated and ventilated seats, 360 degree cameras and USB ports are common, though it’s likely you’ll have to upgrade to a higher trim level or pay more for some of these features. Some cars even offer features that were unheard of a few years ago like parking assist, which may help cars maneuver into a parking spot with limited or no driver assistance.

A new car should need fewer repairs in the first few years

New cars should spend less time in the shop than older ones do. Car parts wear out, often at fairly predictable rates.

Although the difference in repair costs varies between brands or even models within a brand, these costs trend higher as cars age. Using Edmunds’ True Cost to Own tool, for example, a consumer near Seattle who owned a 2014 Accord Sedan EX four-door sedan (2.4L 4-cylinder CVT) paid on average $320 for repairs in the first year of ownership. In the fourth year of owning the same car, the average amount rose to $507.

Buying a new car at the dealership is easy

Brand-new cars are sold by dealerships, not private parties or secondary dealers, which makes buying one fairly straightforward. Simply drive to a dealer, and they’ll be happy to sell you a car.

Because the car is new, you don’t compare mileage on one car with that of another, or worry about whether the car has been in a wreck.

The dealer will even be happy to sign you up for financing on the spot (although that might not be your best deal).

Some dealers offer new car incentives

Some dealer and manufacturer incentives are available to everyone, while others only work if you meet certain criteria, such as being a veteran or living in certain geographical area. For example, Toyota offers a $500 military rebate to qualified service members and veterans. You may qualify for 0% financing incentives, often available to customers with excellent credit. Although new cars are still more expensive than used ones, sometimes a new car incentive can help bridge the gap.

New cars often have better warranties and service contracts

A new car shouldn’t be spending much time in the shop, but if it does, a warranty or service contract can give you peace of mind. The contract may also help you maintain your car in top condition while it is in force, but research the pros and cons of extended warranties before signing.

What are the drawbacks of buying a new car?

If cost were not a factor, perhaps most of us would buy brand new cars every time. In the real world, however, we have limited funds and we need to make the best use of them. Here are three drawbacks of buying a new car.

New cars cost more than comparable used cars

“The gap between pricing of new and used cars is becoming pretty wide,” said Matt Jones, senior manager of Insights at Edmunds. “The average new car price is now about $37,000. A person who is looking to make the most of their money will see a savings on a used car of 30-40%.” When people make payments for close to six years on a car, the more expensive car costs them a lot of money in principal and interest.

“The most bang for my buck, without a doubt, is used cars,” said Jones.

The value of your new car is guaranteed to go down — fast

Cars don’t depreciate (go down in value) at an even rate over their useful lives. Their value tends to drop when they are driven off the dealer’s lot and plummet as much as 50% in the first few years, before slowing down around year five. Those first few years are expensive ones to own a car, when the showroom gleam is first wearing off. Insurance provider State Farm factors in depreciation as well as taxes in its new versus used calculator — plug in the price of a used or new vehicle you’re eyeing as well as your state and local taxes to compare.

It’s easy to overspend on a new car

With new cars, it’s easy to let the amount you are willing to spend creep up beyond what you intended to spend, especially if a dealer emphasizes monthly payments over total sales price. What’s a few thousand here and there when you’re spreading it out over several years?

When you’re bargain hunting for a used car, especially if you’ve saved up all or part of the money ahead, you may be able to stick to a budget more successfully and avoid mistakes.

What are the advantages of buying a used car?

The biggest reason to buy a used car is to save money, saving as much as 30-40%, but there are other reasons, too.

You may get a better car if you buy used

Buying an older car doesn’t necessarily mean settling for less. You may be able to afford a higher quality car if you’re willing to buy it when it’s a few years old. Harzog, the finance author, likes driving a luxury car, such as a Lexus. “I prefer used cars. I keep my cars almost until they turn into dust,” she said. “I’ve only had about four cars in my life.”

By consistently buying used vehicles and keeping them as long as possible, you’ll save over time. AAA estimates that the cost of owning a new car is an average of $8,849 a year — a significant sum if you roll from new car to new car.

You don’t own the car during the years of highest depreciation

If you buy the car after the first couple of years, it’s still a good car. But someone else has paid handsomely for the privilege of driving it new.

Used cars may still have plenty of good miles left

Cars are lasting far longer than they did in the past — Americans keep cars for an average of 10 years, longer for trucks and vans. “The reality is that most used cars, say three or four years old, are going to live for a long time,” Jones said. “Since cars have been built so well in the last few years, a lot of the fears people have can be put aside.”

If you’re worried about buying a used car, Jones suggested buying a certified pre-owned car. “Certified pre-owned is a used car, but it’s a used car that has been treated pretty well and is backed by the manufacturer,” he said. “It’s the best of both worlds. The carmaker is standing behind it.”

What are the drawbacks to buying a used car?

Although you’ll almost certainly save money buying a used car, you should know that buying a used car can be more complicated and sometimes riskier than buying a new car. Here are a few drawbacks of buying used.

You might end up buying someplace besides a dealership

You can buy a used car from many different places, including a reputable used car lot, dealership, website or from a private party. Some people are less comfortable going to used car lots or responding to classified ad listings to find cars. You could buy from a friend, but if anything goes wrong, you can lose the friendship.

It’s harder to compare the values of used cars

Comparing new car prices from one dealer to another should be fairly straightforward. Used cars can have more variables, from the number of miles on the odometer to the condition of the car. This makes it a bit more subjective to determine the value of the car. It’s important to research using a service like Kelly Blue Book or NADAguides.

Older cars require more maintenance and may not be under warranty

The older the car, the more it typically costs to keep it running. Some cars hold together better as the years go by, but they still need regular maintenance, and some parts will wear out. Standard manufacturer warranties vary in length, and some warranties are transferable to new owners, while others are not. Be sure you know if any existing warranty will transfer to you, and how much of the warranty period is left.

Your used car loan may outlive the car

If you buy an older used car, and you finance it for a number of years, be careful. “The danger is that the car is going to continue to lose value,” said Harzog. “You could end up underwater. You’re still making payments on a car, and it’s not worth what you’re paying.”

While this is also possible with a new car, especially if you don’t make a down payment or finance it for a long term with high interest, Harzog recommends that you pay off a used car as quickly as you can.

Is a new or used car better for you right now?

Before you decide to buy new or used, ask yourself these questions:

Do you want a new car? Assuming you can afford it, Jones said, “If you want the new car, get the new car. Maybe there’s new technology, or maybe they want to be the first butt to sit in that seat.” Buying a car is an incredibly emotional decision, and as long as you’ve done your research, buying the right car is more important than deciding to buy new or used. “Make sure you buy what you want,” said Jones. “That sounds obvious, but it’s not. When people buy cars they don’t want and they end up trading them in later, that mistake is far more expensive than any other mistake they could make.”

What will you use the car for? If you need a car simply to get to work safely, the latest technology and styling may not matter much. If you use your car in your work; for example, you drive clients around in your car, you may need to keep up with appearances. You may also need a newer model or specific features if you transport people or goods, if you live somewhere with inclement weather, or if dependability is your top priority.

What can you afford? If you have cash saved to buy a car, you know how much you can pay. If you’re financing a car, whether it’s new or used, make sure you can make the payments. “Just as a guideline, your car payment shouldn’t be more than 10% of your gross income,” said Harzog. “You just want to be sure you have enough cash to cover it. It’s a line item in your budget.” You could use an auto calculator to help you make your decision.

The bottom line

Buying a new or used car can significantly impact your financial life for years to come. A good car-buying decision can help you feel more secure, giving you reliable, affordable transportation. A bad decision, on the other hand, can cause stress and keep you from reaching your other financial goals. In the worst-case scenario, you could even lose your car and wreck your credit if you can’t make the payments.

Whether you buy a new or used car, the secrets to making good purchasing decisions are research, research and research. Before you buy a car, be sure you know why you are purchasing and what you need it for. Make a budget and know exactly what you can afford. And research cars, so you know what kinds of cars you are interested in, and what you should expect to pay, before you negotiate a good deal on your next car.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Sally Herigstad
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Sally Herigstad is a writer at MagnifyMoney. You can email Sally here

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Chase Auto Loan Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Chase auto loan review

Going into a dealership without knowing what auto loan you qualify for can be a dangerous adventure for your wallet. It’s best to have a couple auto loan preapprovals in your back pocket so the dealership can’t take advantage by charging you a higher APR. To help you research which lenders offer best rates, we did some work for you. Here, we’ll review auto loans by JPMorgan Chase & Co: the company, its rates, its pros and cons, how to apply and who may be a best fit.

About Chase

The largest bank in the U.S. with more than $2 trillion in assets, Chase offers everything from mortgages to credit cards.

Chase offers auto loans in all 50 states and D.C. with terms from 36 to 72 months. It also offers the car-buying service TrueCar at no extra charge. This service lets you see what others have paid for the same or similar cars, and has a network of TrueCar-certified dealers which compete for your business with clearly posted car prices.

Chase financing: At a glance

A Chase auto loan could be an option for you, whether you’re looking at a new or used car from a dealership. The bank may also refinance your existing auto loan or help you buy your car at the end of its lease period.

Though Chase declined to share its APR range, “Chase Auto offers competitive rates based on [a] customer’s credit history and the structure of the loan,” said Shannon O’Reilly, a communications executive with Chase, specializing in auto finance. You may be able to get an idea for what rate you might receive by using Chase’s Auto Loan Calculator.

Chase loan rate example

We used the Auto Loan Calculator to compare APRs for a new 2018 Honda in Michigan.

Credit scoreAPRMonthly payment
Very good5.04%$371
APR and monthly payment are for a 72-month loan of $23,000. Rates vary by location. Rates as of 1/7/19.

Are you an existing Chase customer? Chase offers a 0.25% rate discount for Chase checking customers interested in refinancing an existing auto loan. To qualify, you’ll need to have a Chase checking account before you apply for a Chase auto loan, and elect to have your monthly car payment automatically deducted from your Chase account.

A closer look at Chase auto loans

Here are the strengths and weakness we found looking at Chase auto loans. Be sure to compare any auto loan offers you may get from Chase with offers from other lenders.

Highlights of Chase auto loans

  • Credit decisions are usually made within three hours; three days is the maximum time to receive a decision.
  • There is no application fee.
  • Chase ranks in the top half of JD Power’s 2018 U.S. Consumer Financing Satisfaction Study for auto loans.

Lowlights of Chase auto loans

  • Chase doesn’t offer coupon books for you to keep track of your payments.
  • You may not be able to get a loan with Chase if you have poor credit.
  • Chase doesn’t offer auto loans for cars bought in private sales.

How to apply for a Chase auto loan

To apply, you’ll need to go to Chase’s website, call Chase or go in person to a Chase branch.

Whichever way you decide to apply, you’ll have to provide your personal information (e.g. name, date of birth, address, phone number, email, Social Security number), employment and income, the car you want, the loan amount and loan term you want.

You could apply by yourself or with a co-applicant. And if you need to change the car, loan amount or loan term once you’ve begun the application process, you could simply call Chase. Still, keep in mind that any changes you make could result in changes to your APR and other facets of the auto loan offer.

The fine print

To qualify for a Chase auto loan, you need to be at least 18 years old (in Alabama, 18-year-olds have to meet specific state requirements). Chase doesn’t finance all makes and models of cars: some lenders are reluctant to finance a car that is older than 10 years, has more than 100,000 miles or has a salvage title; Chase says it reviews any unique circumstances on a case-by-case basis.

Any offer Chase provides is good for 30 days. If you decide after 30 days that you would like to get an auto loan through Chase, you’ll need to apply again.

Who is Chase best for?

Chase loans are best for existing Chase customers. If you aren’t already a Chase customer, you may be able to quickly become one and receive the 0.25% rate discount on your auto loan. The convenience of having everything in one account, especially if you’re already a Chase customer, is alluring.

It also doesn’t hurt your credit to apply to multiple lenders within a 14-day window anymore than it would to apply to one lender — plus, shopping around for a car loan is one of the smartest things you can do.

So, if you think Chase may be a good fit for you, apply to Chase and compare the offer you may get with responses from other lenders. Potential lenders include your bank, credit union and online lender. And at LendingTree you could fill out an online form and receive up to five potential auto loan offers. LendingTree is the parent company of MagnifyMoney.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Jenn Jones
Jenn Jones |

Jenn Jones is a writer at MagnifyMoney. You can email Jenn at [email protected]

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RV Buying Tips: Get the RV of Your Dreams

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Ever dream of buying an RV? You’re not alone — about 10 million households in the United States already own an RV.“The popularity of RVing is at an all-time high because of the freedom and flexibility RVs offer,” said Kevin Broom, director of media relations at the RV Industry Association (RVIA). “With the same RV, people can take an array of trips, spend time having adventures with friends and family and form memories that will last a lifetime.”

When shopping for a unit, you’ll need to consider what type of RV suits your needs, how much time you plan to spend in the RV, whether you want to buy a new or used unit (or lease an RV) and how you plan to pay for it. This article will explain the costs of owning an RV, as well as how you can get your best price.

The costs of an RV

RVs have a huge range of prices, which vary depending on size, style and other factors, said Broom. As of the date of publishing, here are some estimates for a variety of new RVs, according to the RVIA:

  • Folding camping trailers: $6,000 to $22,000
  • Truck campers: $6,000 to $55,000
  • Conventional travel trailers: $8,000 to $95,000
  • Fifth wheel trailers: $18,000 to $160,000
  • Type B and C motorhomes: $60,000 to $150,000
  • Type A motorhomes: $60,000 to $500,0000

You may be able to save some money by opting for a pre-owned RV instead of a new one, added Julie Bennett, who, along with her husband Marc Bennett, authored the book “Living the RV Life: Your Ultimate Guide to Life on the Road,” and run the RV Success School.

“We have met people who spent less than $5,000 on their RV, and others who spent over $1 million,” said Marc Bennett. “Most of the people we have met that do extended travel in their RVs typically spend between $50,000 and $150,000 on their RV setup, which includes the cost of the truck and trailer, or a motorhome plus the vehicle that they tow.”

You generally don’t need a special license to drive or tow an RV, said Broom, but it’s not a bad idea to look into the laws in your state, especially if you’re buying a very large trailer or motorhome.

The RV, as well as the truck and trailer if the RV needs to be towed, is just one of the costs to consider. You’ll also need to budget for maintenance and repairs, taxes, insurance, vehicle registration, fuel and storage. These expenses can vary from state to state.

There are also an array of optional (though potentially desirable) add-ons, like roadside assistance and extended warranties, that can increase the bottom-line costs of RV ownership.

“RV dealers will try to upsell you on things like paint protection and other options you may not really need,” said Marc Bennett. “You’d be surprised how much all of this can add up, so do your homework in advance and know what you are getting yourself into before committing.”

What kind of RV should you buy?

One of the first things to consider when figuring out which type of RV you should buy is how often you intend to use it.

“If you only plan on RVing a few weeks a year for short vacations, it really doesn’t make sense to spend a whole lot,” said Julie Bennett. “If you’re planning on using your RV for extended travel or even live in it full-time, then it’s easier to justify a bigger investment.”

Here are some other questions you should ask yourself when shopping for an RV:

  • Who will be traveling in the RV? A couple of retirees who are OK roughing it on the road might opt for a travel trailer, while a large family with pets may be better off with a camper van or motorhome.
  • Where do you plan to take the RV? Julie Bennett suggests that potential RV owners think about whether they want to stay in campgrounds with hookups for electricity, water and sewage, or camp off-grid in more remote places, and find an RV that fits those needs.
  • Do you need a special license for the RV? Large trailers or motorhomes may require a special license in certain states, said Broom.
  • What “toys” are you bringing in your RV? You may need to splurge on a larger RV or motorhome if you plan to take bikes, ATVs, kayaks and other recreational gear on your adventures.
  • Does the RV have a floor plan and layout that makes sense for you? “Pay attention to the things you will use most often,” advised Julie Bennett. “Is there sufficient counter space in the kitchen for making meals? Can you fit inside the shower and wash your hair?”
  • How far will you take the RV? If you want to keep costs in check on long-haul trips, you might need to pay more attention to things like the weight and aerodynamics of the RV. You should also consider whether you want a diesel or a gas engine. Gas engines generally don’t get as much power or as efficient mileage as their diesel counterparts, but they tend to be less expensive.

Should you buy a new or used RV?

Every future RV owner is faced with one big question: Should you buy a new or a used RV? Here are some pros and cons to consider.

Pros and cons of buying a new RV


  • You know the history of the RV. Buying a new RV means you don’t have to worry that a previous owner cut corners on care and maintenance.
  • You can personalize the RV. “Some may like that they can choose their floor plan, layout, decor, color scheme and options, and some may want the latest technologies,” said Marc Bennett.
  • You can avoid potential allergens. Does your child have a severe peanut allergy? There’s no guarantee a used RV doesn’t contain peanut residue from a previous owner, so you might be safer buying a new one.


  • You’ll probably pay more. “Not only will you pay more for new, you will also see the sharpest dip in depreciation as soon as you drive it off the lot,” said Marc Bennett.
  • You still may need to make repairs. Just because you’re buying a new RV doesn’t mean it will be trouble-free. “RVs are very complex, and built by hand in relatively low-tech facilities,” he added. “Once new RVs leave the dealer’s lot, they tend to need more repairs and fixes — much like a punch list on a new house build.”

Pros and cons of buying a used RV


  • You’ll probably save money. The older an RV is, the more of an effect depreciation will have on its price tag, said Julie Bennett.
  • It’s already broken in. The problems associated with a brand new RV may have already been taken care of by a previous owner, which could save you time and money on repairs.
  • It might come with extras. People often include extra items when selling their RVs, said Julie Bennett. You may luck out with an upgraded suspension, RV gadgets or kitchenware at no additional cost.


  • It comes with risks. If the previous owner didn’t maintain an RV properly, it may need new parts or repairs.
  • You may need to renovate it. If an RV’s aesthetics are dated or simply unappealing, it’s on you to fix it up.
  • It probably won’t have a factory warranty. You may need to shell out for repairs right away before you can drive the RV, said Julie Bennett.

Where can you buy an RV?

There are a variety of places to buy an RV — and according to Marc Bennett, you may need to travel far to find the right one at the right price: “We traveled thousands of miles when buying our first RV. Opening up geographically allows for much more selection,” he said.

Here are some of the places you can start your search for an RV:

  • New RV dealerships: Looking to buy a new RV right off the lot? Then shopping at a new RV dealership might make the most sense. “Buying from a respected dealership might provide some peace of mind that they have checked the unit and it is ready to go,” said Marc Bennett.
  • Used RV dealerships: Used RV dealers might not know as much about the history of a particular unit as its original owner. However, you may be able to purchase an extended warranty for some added protection.
  • RV shows: RV shows offer the opportunity to see a wide variety of models in one place. Should you find the unit of your dreams at an RV show, you may be able to score special discounts.
  • Private sales: Buying a used RV directly from its owner allows you to learn more about its history, maintenance and unique quirks, said Marc Bennett. “An owner will be able to share much more detailed information about the specific RV than a dealership,” he added.
  • Online marketplace: Do you already know exactly what you’re looking for in an RV? An online marketplace could help you find it quickly. and Craigslist are popular places to find private RV sales online, said Broom.

How do you get your best price on an RV?

The price tag on an RV can give you serious sticker shock. Luckily, there’s lots of room for negotiation, and you should not plan to pay the asking price, noted Marc Bennett.

“There’s no hard and fast rule about how much discount you can get on an MSRP [manufacturer suggested retail price],” he said, “but it is not uncommon to buy a new RV for 15% to 30% off the MSRP.”

Going into the negotiation armed with knowledge can help you get your best price on RV, added Julie Bennett.

“Get a few price comparisons on the RV you want to buy,” she said. “Know what questions to ask, know [what’s] a fair price for the RV you want, and keep an eye out for deals at certain times of year,” also noting that you may be able to get the best price when a dealer is clearing out old models to make room for new units.

If you can’t afford to pay cash, you may be able to take out an RV loan or secure other financing to make the purchase. Here are some ways to finance your RV:

  • Dealership financing: Dealerships may offer financing through lending partners (such as a bank or credit union), or offer in-house financing. This is convenient, as you can get your RV and your loan all in one place. However, dealers may use this type of financing to bolster their bottom line, so if the rate offered isn’t competitive, you might find a better offer somewhere else. Additionally, dealership in-house financing, which is usually offered to people struggling to find financing elsewhere, can carry high interest rates.
  • Banks, online lenders and credit unions: You may be able to secure an RV loan from an online lender, credit union, bank or other financial institution. Since dealers may not have partnerships with lenders you’re interested in, you may need to seek out quotes directly from the institutions themselves. Make sure to shop around to compare offers. Though credit unions may have lower rates, you’ll need to become a member.
  • HELOC or home equity loans: You may be able to use a home equity line of credit (HELOC) or a home equity loan to secure the funds for an RV. With both of these options, you’re borrowing a portion of your home equity. Keep in mind that you’re putting your home on the line with this type of financing, so make sure you’re on firm financial footing before moving forward. However, because the loan is backed by collateral, interest rates tend to be lower. With either option you’ll also need to pay closing costs, a process that can take several weeks or longer.

The bottom line

RVs offer the freedom to travel the country on your terms. Whether you dream of a life on the road or you’re just looking to spend a couple of weeks in the great outdoors every summer, you can get an RV to make it happen.

Remember: There’s no one-size-fits-all solution to finding or financing the RV of your dreams. Do your homework, know what you’re looking for and don’t be afraid to walk away from a bad deal. The right RV is out there waiting for you — and with enough legwork, you’ll find it.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Joni Sweet
Joni Sweet |

Joni Sweet is a writer at MagnifyMoney. You can email Joni here