Two of the biggest purchases you’ll ever make are buying a new car or buying a new house. Both are large expenses often requiring loans or lines of credit, and both new homes and new vehicles both have their pros and cons. In the world of personal finance, there are many pundits willing to advise you on whether or not you should purchase a new car or a new house first, and there are certainly times where necessity will ultimately govern your decision making. That said, if you’re considering whether to buy one before the other, here are some things that you should keep in mind when weighing your decision.
New House: The Pros
At its heart, buying a new or newer home offers you top-of-the-line amenities and peace of mind. Instead of worrying about whether the building has foundational issues or if you’ll need to replace the boiler in three months, you can rest easy knowing that your new house is up-to-code. Some newer homes even have extra features that make them more attractive, like renovated kitchens and bathrooms, or high-quality roofing courtesy of Everlast II. While a newer home can be pricier, you know what you’re getting with a new construction or gut rehab, making the purchase of a new house a much stronger investment overall.
New House: The Cons
As was mentioned in the section on the benefits of buying a new home, purchasing new property can be expensive. Price is certainly one of the main reasons you may want to search for an older home, but that’s not the only reason to consider purchasing a fixer-upper or more dated house. In fact, many older homes have distinct, charming features that contribute to their overall feeling of hominess. That feeling can’t necessarily be replicated in new constructions, which all tend to look alike with their modern, open floor plans and grey slate countertops. New houses may also be more popular with other buyers, too, meaning that you may end up in a bidding war for your home, potentially paying more than you’d planned.
New Car: The Pros
One of the best reasons to buy a car new instead of used is the protection plans that you can qualify for one purchasing or leasing a new vehicle. For example, if you’re buying a used Jeep, and it has an issue in the first six months of your purchase, there’s not much the dealer will be willing to do for you, as the vehicle was pre-owned. However, if you would have purchased your car new, you likely would have quality for one of many Mopar protection plans for Chrysler Dodge Jeep RAM vehicles. Other dealerships and automakers like Toyota and Volkswagen offer similar deals for their new automobiles, too, based on mileage or years of ownership. Suffice to say, if your vehicle has a mechanical issue or recall, you’ll be much happier if you bought a new car.
New Car: The Cons
Price is at the top of the list when considering the cons of buying a car new. Cars depreciate in value quickly, too, making them a major financial liability. Of course, you don’t buy a car as an investment vehicle; you buy a car for its ability to transport you from one place to another. In this respect, many used cars will function much the same as a new car, and at a fraction of the price. When you’re considering buying a new car, think about how often you will use or need all of the bells and whistles. Many brands, like Toyota, make vehicles that are reliable enough that even purchasing a model that is five or ten years old may still be worth it, since the car may have many more years in it before it ultimately gives out.
Clearly, there are pros and cons to buying new or used, but what’s the best protocol when choosing whether to buy one first? If you have an immediate need, it makes sense to purchase shelter or transportation, whichever is most pressing. If money is less of a variable you’re considering, it may be off to make the larger investment and purchase a home first. While your loan will be significantly larger than if you were taking out a car loan, you will still have a financial asset to sell off down the line should you need to. Having something like a home that holds value better than a car means that you’re setting yourself up for success, should you face an emergency and need to come up with some cash quickly.