Comparison: New vs. Used Cars – Which to Buy for the Holidays?

Here at CouponXoo, we regularly compile the best deals and coupon codes to help savvy shoppers save money throughout the year - including during the busy holiday season. One major purchase many consumers take on during this time is a new or used vehicle. On CouponXoo, we analyze the pros and cons of new versus used car options to determine the better buy. Keep reading our comparison breakdown to help inform your vehicle shopping decisions this holiday season.

Cost

Upfront cost is usually the biggest difference between new and used cars. A used car will almost always be less expensive than its new counterpart. According to Kelley Blue Book, the average price of a 3-year-old used car is about 40% lower than the original sticker price of the same new model.

While new cars depreciate sharply in the first few years after purchase, used cars that are a few years old have already gone through the worst depreciation. They offer good value at a lower entry price point. However, the ongoing costs of a used car like repairs, maintenance, and replacement parts can add up over time.

A new car lets you take advantage of manufacturer warranties and lock in today's interest rates if you decide to finance the purchase. It may come with loyalty or introductory incentives from automakers as well to help lower the initial cost. On the other hand, opting for gently-used certified pre-owned (CPO) vehicles from 1-3 years old also offers peace of mind from an extended factory-backed warranty.

Though more expensive upfront, a new car's lower interest rates and included maintenance plans can balance out the total cost of ownership over 5-6 years compared to an older used model. For buyers on a tight budget or those not keeping vehicles long-term, a 2-5 year old used car makes more financial sense.

Reliability

New cars come with the expectation of many trouble-free miles ahead before any major repairs are needed. Their critical components like engines and transmissions are fresh and have low wear and tear. Manufacturers also use improved materials and technology with each new model year for enhanced reliability.

However, used cars, especially those certified and still under an automaker's powertrain warranty, can also offer years of reliable driving depending on their service history and previous owner. CPO vehicles go through rigorous inspections and come with a factory-backed warranty, assuaging concerns about any hidden problems.

It's best to have an independent mechanic inspect any used car before purchase, review service records, and check for red flags like damage, unresolved recalls, or multiple owners. Late-model used cars 1-3 years old have had early bugs addressed and offer reliability close to new while also saving thousands from their original MSRP.

Safety

All vehicles sold today meet strict federal safety standards. However, newer cars continuously advance safety technology with each model year through standard and optional features. Some of the newest safety innovations include advanced driver-assistance features, automatic emergency braking, blind-spot monitoring, rear cross-traffic alert, and more.

Some of these latest active safety features are now filtering into certified pre-owned and 3-4 year old used cars as well. Still, a brand new car offers access to the absolute cutting-edge in safety equipment. However, even an older used vehicle remains a much safer way to travel than other modes of transportation if well-maintained. Consumers should prioritize standard crucial basics like multiple airbags, electronic stability control, and anti-lock brakes in any vehicle choice.

Features

New cars come fully loaded with the latest infotainment and convenience features as standard or available options. Beyond advanced driver-assist and safety gear, new models offer connectivity and packages including the most up-to-date audio, navigation, compatibility with smart devices, and comfort amenities. Some even include semi-autonomous capabilities.

On the other hand, a 3-5 year old used vehicle may still provide plenty of the latest tech at a value price and come with key features included. One can opt for a gently-used certified model with design certified to include desirable features without today's new car tech or maintenance costs. Either way, it's important to comparison shop new versus used trim levels and packages to evaluate inclusions relative to your needs and budget.

Warranty Coverage

New car buyers obviously get the peace of mind and security blanket of a full factory warranty, usually 3 years/36,000 miles minimum on most components. Certified pre-owned or CPO vehicles (typically less than 6 model years old with under 75,000 miles) also qualify for an extended factory-backed warranty, albeit shorter than a new car's coverage at an average 1-2 years/100,000 total miles.

Meanwhile, regular used cars likely only have any remaining part of the original powertrain warranty left, if at all. Extensive repairs down the line then become the owner's full financial responsibility. Having the protection and coverage of even a certified pre-owned vehicle's warranty or a new car's full factory coverage has value, giving buyers assurance for major issues. It removes uncertainty that could come up with an older used purchase lacking warranty protection.

Resale or Trade-in Value

When it comes to reselling or trading-in down the line, new cars generally hold their value better than used vehicles for obvious reasons - they've incurred less depreciation from lack of prior use and have been rigorously inspected as factory certified. According to iSeeCars, 3-year-old used cars on average lose about 45% of their original MSRP value.

New car shoppers considering keeping a vehicle long-term should factor in potential higher resale values down the road. Those wanting frequent new rides should remember new car depreciation hits hardest in years 1-3. Getting more for a trade-in also helps lower the overall cost of ongoing car ownership through constant upgrades. But buying used for a few years can still satisfy needs without eating into initial resale ability as much as driving a new car off the lot does.

Personal Enjoyment

For many buyers, the sparkle, differentiation, and euphoria of driving off the dealership lot in a brand new vehicle is a big part of the holiday joy and gift-giving spirit this time of year. Having the first crack at an all-new model or being among the earliest adopters of the latest redesign brings its own elements of excitement.

Meanwhile, others simply want transportation and prefer the convenience of sliding into a used-but-comfortable or certified vehicle that provides similar functionality for lesshassle. Personality, temperament and wealth play a role. So does how much personal pride and enjoyment factor into the larger calculation versus objective priorities alone when deciding new versus previously-owned.

Driving Dynamics

Shiny new vehicles benefit from optimized handling, braking, ride comfort, and drivability right from the factory, as engineers have fine-tuned every aspect of the latest model year's driving dynamics. Used cars can feel a bit less spirited depending on how many owners and miles are on them already. But a certified pre-owned vehicle kept in good condition by prior drivers need not compromise substantially.

Meanwhile, certain older used cars may already have worked out some initial depreciation but still drive quite pleasantly thanks to solid construction of their era. Test drives help prospective buyers assess steering, acceleration feel, suspension integrity, and overall road manners relative to needs. Either option can work depending on other priorities, but a new car theoretically treats drivers best dynamically before any aging occurs.

Environmental Impact

New cars rolling off the production line consume vast resources and produce substantial emissions involved with manufacture. However, modern vehicles—especially electrified models—constantly improve environmental performance each year. Used cars don't require this manufacturing output but still burn gas that emits carbon pollution.

Overall, a newer high-efficiency vehicle, regardless of powertrain, has lower impact than an older gas guzzler. Keeping any car in good working order and driving it for many years lessens total emissions versus frequent new car buying as well. Conscious consumers should assess eco-friendliness based on estimated yearly fuel or electric use factored by each candidate vehicle's lifecycle effects if owned long-term.

The Verdict

In summary, new cars have definite advantages of total-cost savings potentially, the latest technology and infotainment, full factory warranty coverage, potential higher base resale values eventually, and optimal driving dynamics before aging sets in. However, gently-used certified models roughly 1-3 years old provide nearly new driving experience in many cases, at significant initial savings, with less total depreciation risk taken.

For shoppers open to a few years' prior use, certified pre-owned vehicles offer attractive balance of lower current costs, recent reliable technology and features, along with peace of mind from an extended factory-backed warranty. Those needing ultimate budget-friendliness should consider regular used cars 2-5 years old, inspected carefully for needs. Weigh personal and practical factors before deciding new versus used this gift-giving season. With careful consideration, either option can work well to deliver festive transportation.

As always, be sure to check back at CouponXoo for the latest rebates, coupons and promotions from auto manufacturers and dealerships to help stretch your vehicle budget even further during this holiday spending period. Happy shopping and safe driving!