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Used luxury or fully-loaded new car? Edmunds weighs both

By Ronald Montoya

Edmunds

The luxury vehicle of your dreams might now be something you can afford, thanks to a record high number of lease returns hitting the used-car market. This trend has widened the price difference between a new vehicle and a 3-year-old used one, according to Edmunds transaction data.

Consider this scenario: You’re prepared to spend $30,000 on your next car. You’ve been looking into a 2019 Honda CR-V, which is an Edmunds top-ranked small SUV. For that price you can get the EX-L version that comes loaded with such options as leather, navigation, automatic climate control, and a rearview camera.

But if you looked to the used market, you could potentially get a 2016 Mercedes-Benz GLC, an Edmunds top-ranked luxury SUV. We found a midsize certified pre-owned GLC with just over 15,000 miles for about the same price as the new CR-V. It, too, had plenty of features including a panoramic sunroof, blind-spot assist and heated seats.

Mercedes luxury at a Honda price point ? it’s a tempting proposition. But is it the smarter choice? Edmunds looks at the pros and cons of buying a new non-luxury car versus a used luxury vehicle.

PROS: NEW NON-

LUXURY VEHICLE

Perfect condition: Since you are its first owner, the new vehicle will only have a few miles on it.

Longer warranty: New vehicles come with at least a three-year limited warranty and at least a five-year warranty for the powertrain.

Better selection: You can go to any franchise dealership and find the new vehicle you want. Used vehicles are sold everywhere, but they will have a greater degree of variation because of their mileage, options and condition level.

Better incentives: The new vehicle may have incentives that can drop the price or offer a lower interest rate.

Less maintenance: A new car should only need oil changes and tire rotations for a few years. If something breaks down, it will be covered under the new-car warranty.

CONS: NEW NON-LUXURY VEHICLE

Steeper depreciation: A new car will see its highest depreciation in its first few years. The first year alone brings a drop of about 30% on average among all brands, according to Edmunds data.

Not as flashy: The new car will get you where you need to go, but it won’t be a luxury vehicle. This low-key presence is only an issue if one of the things you want in a car is the ability to wow your friends and family.

PROS: USED LUXURY VEHICLE

A more premium experience: The interior is often fitted with premium materials, such as walnut wood trim, soft-touch plastics and aluminum inserts. Just about everything will make it seem like you paid more than you really did. Also ? while this is subjective ? a luxury vehicle’s overall design and style are usually more expressive.

Superior performance: In general, a late-model used luxury vehicle will accelerate, steer and brake better than a new vehicle at the same price point. These qualities can enhance your overall enjoyment of driving.

More stable depreciation: The first owner of the car has already taken the big depreciation hit. The depreciation curve should have leveled off by this point, so the value of the vehicle won’t continue to plummet.

Loaner access: Assuming you are going to have your car serviced at one of the luxury brand’s dealerships, you may have access to a free loaner car.

CONS: USED LUXURY VEHICLE

Shorter warranty: If you bought a 3-year-old luxury vehicle, you would only have about a year left on the new-car warranty. The certified warranty on a certified pre-owned vehicle typically adds another year to the original warranty. An extended warranty can give you more coverage but at an added cost.

More expensive maintenance and repairs: Since the used luxury vehicle has more miles and often more complexity, it will usually need more maintenance items addressed than the new car. Additionally, parts and labor rates are more expensive for luxury vehicles.

Less efficient: Since luxury vehicles tend to come with larger or more powerful engines, they are often less fuel-efficient than non-luxury vehicles. Furthermore, many luxury-car engines require premium fuel, which also adds to the cost of ownership. In our particular example, you’d spend about $700 more a year on fuel for the Mercedes than the Honda, according to Fueleconomy.gov.

EDMUNDS SAYS: While you can buy a used luxury vehicle for the same price as, or less than, a new car, there are a number of other ownership costs to consider. But cars are also emotional purchases, so for some, a decision like this won’t always be based on dollars and cents. With your eyes wide open, buy the car that makes you the happiest ? even if it wouldn’t be the right choice for someone else.

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This story was provided to The Associated Press by the automotive website Edmunds. Ronald Montoya is a senior consumer advice editor at Edmunds. Twitter: @rmontoyaedmunds.

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