The warmer months are here, and car sales are heating up! Summer is one of the busiest times for car buying, thanks to fresh inventory from manufacturers, summer sales at dealerships, and more people looking to sell or trade in their current vehicles. Plus, the nice weather makes test-driving more enjoyable.

If a new ride is on your mind, you have an important question to ask: Should I buy new or used? It sounds like a simple question, but each option comes with pros, cons, and financial trade-offs. In this guide, we’ll break down how new and used vehicles can impact your wallet and lifestyle.

Step #1: Determine Your Car-Buying Budget
Whether you plan to shop for new or used vehicles, the first step is figuring out how much you can afford. Look over your budget and determine a realistic number you can work with monthly. Then, use the credit union’s free online financial calculators to plug in the monthly payment and estimate a total vehicle price based on different loan terms (e.g., 48 months, 60 months, 72 months).

Next, you want to reduce the amount you borrow by making a down payment. This is money you pay upfront at the dealership to help lower your loan amount and future interest costs. If you have a current car to trade in, that will serve as part of your down payment.

Tip: Aim to put down 20% of the vehicle price for new cars and at least 10% for used.
When setting a budget, remember that new vehicles tend to come with higher prices and monthly payments. But that’s not all you should consider in your car-buying decision.

Step #2: Factor in Ongoing Costs
The purchase price is likely the key financial figure on your mind, but there’s more to consider. You’ll need to factor in routine expenses that come with owning a car. And, you guessed it, these prices can vary between new and used vehicles.

• Fuel Efficiency:
  While new cars tend to get better gas mileage due to new technology and parts, used cars typically won’t be far behind – unless they are significantly older. For example, if you purchase a pre-owned vehicle that is only a couple of years old, you might not experience a drastic difference. However, if the car is seven or more years old, you’ll likely end up paying more at the pump. So, factor in your daily commute when setting your budget.
• Insurance:
  Newer cars tend to have higher insurance premiums, especially if you’re looking at an EV (electric vehicle). However, you’re less likely to need costly repairs with a new car – helping to offset the more expensive insurance premiums.
• Maintenance & Repairs:
  New vehicles tend to require less ongoing maintenance and repairs compared to used cars. Plus, routine maintenance might be included for the first few years as a dealership incentive – along with a warranty. While pre-owned vehicles might require more ongoing maintenance, this can be offset by the lower insurance premiums on used cars.

Tip: If you purchase a “certified” pre-owned car from a dealership, they often include a warranty for a specific timeframe.

Step #3: Consider How Long You’ll Own the Car
Most people nowadays tend to keep their cars (both new and used) longer than in the past due to the constant fluctuations within the economy. Take a moment to determine how long you owned your current car and estimate the timeframe you plan to keep your next vehicle.

While new cars tend to cost more and have higher monthly premiums, you’re less likely to incur costly out-of-pocket repairs on the vehicle over the long term.

If you plan to keep the car for only a few years, a preowned option will be more affordable – especially if it’s a “certified” used car from a dealership.

Step #4: Evaluate Your Need for Bells & Whistles
It can be hard to resist the latest gizmos and gadgets packed into new cars. It’s just like the latest smartphone – a handful of new features are worth the money to some. Others can hold off a few years until they upgrade.

When determining which car option will work best in your budget, you must weigh the pros and cons of these features. For example, if you have young children, you might want all the latest safety features in new cars. Others might not need or want to pay for the latest and greatest infotainment and touchscreen perks.

Step #5: Weigh the Pros & Cons
Car owners are like snowflakes – no two are just alike. Your priorities and preferences are completely unique, so only you know which choice best matches your lifestyle and budget. Carefully weigh what matters most to you to ensure your decision aligns with your needs.

• Pros & Cons of New Vehicles

• Pros & Cons of Used Vehicles

Step #6: Secure Financing
No matter what road you take – new or used – securing proper financing is crucial to scoring the best deal on your new ride. Our team will work with you one-on-one to get you approved and ensure your next car fits within your budget.

With your pre-approval in hand, you can:

• Shop with confidence & avoid dealership pricing games
• Know exactly how much you can afford to spend
• Boost your negotiating power with dealerships or private sellers

LMFCU Auto Financing:
Apply for the maximum loan amount that you’ll need and we will pre-approve your credit. Credit pre-approvals are valid for up to 45-days and will include your interest rate, down payment requirements (if any), your estimated payment and loan repayment term.

Get an Autodraft
For dealer purchases, you may complete your purchase with an Autodraft, a pre-approved check given to you by the Credit Union which you complete and give to the dealer. The Autodraft includes a not-to-exceed loan amount and is valid for 60-days. Select your vehicle and work out your purchase details with the dealer. Make the Autodraft out to the dealer for the loan amount and drive off with your vehicle. Once the Autodraft is paid, we contact you to work out the loan repayment terms and repayment arrangements.

Additional Information on LMFCU Auto Buying Aides and Financing

We’re Here to Help!
Everyone is different, especially when it comes to choosing the car that matches your unique personality and budget. Both new and used vehicles have their pros and cons; however, by taking time to review your needs and finances, you’ll be in a better position to make the right choice.

If you’re ready to get pre-approved for your next car loan or have questions about the car-buying process, we’re happy to help. Please stop by the Credit Union or call 410-687-5240 to speak with a team member today.

Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.

5/2/25