Q: What is a New Car?

December 17, 2013 12:53 PM

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Several definitions exist for a new car, depending on the source and purpose of the definition. The basic mechanical operation of a new car is generally the same as for older models, although a new car often has better performance and more features. However, the purchase of a new car also requires you to perform additional steps that are not required when you buy a used car.

A new car is not necessarily a car that has never been driven. Consumers often refer to a car made during the current model year as new, even though such a vehicle may have a significant amount of mileage on it. A car dealer may also sell a demonstration model as new. The Internal Revenue Service may allow you to declare a tax credit when you purchase a new car. For tax purposes, the IRS generally defines a new car as one that has never been registered for personal use with the state Department of Motor Vehicles (DMV).

Historians generally consider the first new car to have been sold in the 1890s, although the specific candidates for this title are always in debate. The mass production of cars began in 1902, and the Ford Motor Company introduced the assembly line in 1914. All major new-car manufacturers were using assembly lines by 1930.

The performance of cars increased rapidly until the oil crisis of the 1970s greatly increased the cost of gasoline. Commercial cars generally decreased in performance during the 1970s and 1980s due to be increasingly tighter restrictions on exhaust emissions and fuel economy. Computerized electronics have been the area of greatest advancement for new cars.

The greatest benefit of buying a new car for the consumer is generally reliability. The only maintenance the new car should require for the first few thousand miles is a tune-up and oil changes. The minimum warranty for a new car typically lasts for three years or 30,000 miles, whichever comes first. Many new cars have warranties that cover the car for six years or 60,000 miles, even longer in many cases. Most new cars have two warranties, one for the powertrain (engine and transmission) and one for everything else (bumper-to-bumper). Some manufacturers also cover routine maintenance while the new-car warranty is in effect. Many states also have lemon laws, meaning that you can return the car and get a replacement or refund if the car requires major repairs within a certain period.

Most consumers are not able to pay cash for a new car. Dealerships routinely offer car financing. This generally means that the buyer pays a specified percentage of the car's price and makes monthly payments that include interest. The interest rates on a new car are typically much lower than for other types of loans because the car serves as collateral.

Make sure you agree on the definition of a new car when you are discussing this issue with someone. You will need to consider many factors when deciding whether you will buy a new or used car, such as maintenance, insurance and depreciation. You will also need to register your new car with your state's Department of Motor Vehicles.

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