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Military Finances 101: Is It Financially Better to Buy a New or Used Vehicle? Thumbnail

Military Finances 101: Is It Financially Better to Buy a New or Used Vehicle?

Managing Your Finances

Transportation is a requirement for most Active Duty military members, so you'll likely need buy a car at some point (O.K...Maybe you'll just buy a motorcycle). When shopping for a new car, it can be hard to decide whether to buy brand new or save some money and get a used one. Neither option is entirely perfect, which is why we have gathered pros and cons to both new and used vehicles to aid you in your decision.

Pros of Buying a New Car


Purchasing a new car typically means you can have peace of mind in knowing it won’t break down anytime soon. This can be very important for an Active Duty Military Member. And in the off chance there is an issue, the car is likely under warranty for the first few years or couple thousand miles of its life.

Advanced Technology

From automatic emergency braking and adaptive cruise control to lane-keeping assistance, these safety features are standard in most new cars sold today. If advanced safety features like these are important to you, purchasing a brand new car may be the way to go.

Buy With Ease

Not only will you have more options in makes and models, but car dealerships tend to do a lot of the legwork for you when it comes to paperwork, pre-purchase inspections, etc. It likely won’t be hard to find the type and model car you’re interested in purchasing, and you won’t have to worry about looking into accident reports, previous maintenance checks or owner histories. 


Buying a new car is the favorable option in the eyes of a lender, meaning most borrowers seeking auto loans will get better interest rates when purchasing a new vehicle. 

Cons of Buying a New Car

Higher Price Tag

Car prices are rising, and new cars are especially expensive. The average cost of a new car is over $38,000, 3.9 percent higher than the average in August 2019.1

Sales Tax

Since you’ll be taxed on the entire price of your new car, you’ll likely be paying more in taxes than if you were to buy a used car. 

Insurance Premiums

Lenders and leasing companies may ask you to have gap insurance to cover the difference between what you owe on the loan or lease and your new vehicle’s value. Your lender may also require you to have certain auto insurance, such as collision and comprehensive coverage.

Pros of Buying a Used Car

Save Money

Not only are used cars priced cheaper, but you’ll also likely be paying less in sales tax. Buying a used car could save you thousands, and you may not need to obtain an auto loan to purchase it if you have enough saved up (saving you interest as well).

(Potentially) Lower Insurance Premiums

If you’re purchasing a used car, you may not need to or be required to obtain the same level of coverage as you would when purchasing a brand new car. The make, model and year of car you’re looking to insure will also affect how much you pay in insurance premiums.

Affordable Upgrades

Maybe you can’t afford your dream car brand new yet, but you could potentially buy one that’s been used. You just have to be willing to take a car that has higher mileage or a few imperfections. This may also make upgraded models more affordable, meaning you could buy a used car with heated seats, leather interior, sunroof, etc. 

Avoid a Depreciation Hit

A car depreciates in value as soon as it's purchased - sometimes significantly. When you buy a used car, you let the original owner take more of a depreciation hit, since most of a car’s value is lost during the first few years of ownership.

Cons of Buying a Used Car

Choices Are Limited

It may be harder to find the exact model or specific features you want when looking at used cars. You’ll also likely be buying the car as-is, meaning that you’ll be buying any potential issues that it already has.

Financing Can Be Challenging

If you’re planning to purchase a used car with the assistance of an auto loan, you may find that interest rates could be higher than if you were to purchase a new vehicle. In turn, you could expect more expensive monthly payments on your vehicle.

Researching cars can be tedious and cumbersome - but narrowing your search down to new or used vehicles can help make your decision easier. 

Consider these pros and cons of both before heading to the dealership, as this can help drive the direction of your car search.

If you found this article useful, you might like the following blog posts:

Military Finances 101: What Is a Mortgage and How Does It Work?

Military Finances 101: Emergency Funds...Yeah, They're Important

Military Finances 101: Building a Spending Plan

  1. https://www.kbb.com/car-news/new-cars-prices-higher-than-everan-ever/

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