It happens to everyone. The old clunker gasps its last smoky gasp at the side of the road, and you're left to face a sickening reality – You need new wheels.

The ads on television all scream in your ear, "New Car! New Car! New Car!" A shiny, clean new car does sound appealing, but you've also heard from your annoying know-it-all friend who says buying used is the smarter choice in the long run.

It's a tough decision to make.

New, Glorious New

There's just no denying the curb appeal of a brand new car, from that new-car smell to the shiny paint, the clean interior, and the "ooohs" and "aahs" when your friends see it for the first time.

In our consumer culture, a new car is an undeniable status symbol that lets everyone know you have arrived (literally). Cosmetics aside, purchasing a new car also comes with a host of other positive attributes.

New Car Positives

It's new! Most new cars have good reliability records, and if anything does go wrong, it's probably covered by the warranty. Buying new also means that you have no concerns about how the vehicle was treated before you bought it.

Many new cars come with roadside assistance. This provides peace of mind and saves you the cost of paying for a plan your own or paying towing expenses if you're stranded on the side of the highway.

Key Takeaways

  • A late-model pre-certified used car may come with low mileage and a dealer warranty.
  • You could get a luxury car for a moderate-car price.
  • Then again, there's nothing quite like driving a new car.

New cars are also likely to offer the highest fuel efficiency standards and the latest safety features, such as a rearview camera, side-curtain airbags, and structural reinforcements.

Many companies offer financing programs with low or no interest if you have good credit. That makes it less expensive to finance a new car than a used car.

New Car Negatives

Buying a new car is hard on the wallet. New cars cost more up front and depreciate in value more quickly.

A vehicle loses the most value in the first few years of ownership. It actually loses a huge chunk of value in its first few seconds off the lot.

In other words, when you purchase a new car from a dealer, you pay the full retail price. As soon as you're off the lot, the car is worth its wholesale price. This is the amount the dealer would be willing to pay if you turned around and tried to sell your car back. The instant loss is 15% to 20%, according to Bankrate.com.

So, buying a new car means that you are incurring higher debt and losing value more quickly than if you had purchased a used car.

New cars also come with higher insurance costs than used models, as replacement values are higher.

Finally, new cars don't stay new for long. In a day, a week, or a month, you'll get your first scratch or nick. By the end of the first year, the floor will be stained, the doors will be dinged, and that sweet new car smell will be gone.

Of course, the monthly payments will linger for years.

Used, Humble Used

"Pre-owned vehicles," to use the marketing jargon for used cars, lack the mystique of new cars. But they're hard to beat when it comes to practical financial reality.

Buying a late-model, low-mile vehicle can be a bargain hunter's dream come true.

Used-Car Positives

Buying used is an opportunity to get the best car for your money. You might be able to buy a luxury car at a down-market price.

Pre-certified dealer programs offer strong warranties, often including the remaining balance of the factory warranty plus the opportunity to purchase an extended warranty.

A new car loses 15% to 20% of its value when you drive it off the lot.

Most modern cars will go 100,000 miles or more with few mechanical difficulties. Buying a car that has 40,000 miles on the odometer could mean 60,000 or more miles of trouble-free driving. Some vehicles now offer drive-train warranties that cover the most expensive components of your drive train for 200,000 miles.

For all practical purposes, low mileage, late-model used cars are basically new. If you trade your car in every few years the way some people do, you aren't likely to notice the difference between a used vehicle and a new one because

If you are handy with a wrench, buying a car that needs a little time and attention can dramatically reduce your acquisition cost

Used-Car Negatives

Despite the warranties, used cars still come with unknowns. Because you don't know how the car was treated by the last owner or why it was traded in, there is always that fear of buying somebody else's problem. Even if the car is perfectly sound, you will need to perform required maintenance sooner than on a new car. This maintenance includes items like radiator and transmission flushes, new brakes, and new tires.

On a more practical level, it is challenging to find a used vehicle that comes with the exact options and features that you want. You also have less recourse if you have purchased a lemon, as lemon laws often apply only to vehicles under a certain age and with less than a certain number of miles on the odometer.

New or Used?

The decision to purchase a new or used vehicle should be based on a number of factors. You need to be comfortable with the financing options and the long-term implications for your personal financial situation. You need to feel safe, and you'll need a vehicle that is reliable. Finally, you need to make sure your new car has the comfort, features, and amenities you want.

Buying a car is a major financial decision. Aside from the purchase of a home, it often qualifies as the largest purchase people will make in a lifetime, so make sure to do your research and enjoy the ride!