Should You Buy a New or Used Car?

Buying a car is a big financial commitment. After property, it’s one of our biggest assets.

Yet, there’s a considerable price difference between new and used cars, not to mention the various pros and cons of each. Do you fork out more for a vehicle free of engine woes or take a chance on a bargain.

Below, we’ll look at some of the key differences between new and used vehicles to help you decide what’s best for your financial situation.

When to buy new

New cars can carry a hefty price tag and can set you back around $30,000* on average. Yet, they can still be great value – especially if you shop around for a fuel efficient and reliable model. New cars can be worth it in the following situations:

  • You want peace of mind. New cars are free from underlying mechanical issues and come with a warranty of at least three years.^ This means that if you notice any faults within this time frame, you won’t be charged for repairs.
  • Freedom of choice is important to you. Buying brand new means you can choose a vehicle suited to your exact needs. Whether it’s specific features such as a sunroof or a five-star safety rating, you have the ability to shop around.

Buying a second-hand car

Used cars can be a sensible option if you’re looking to buy your first car or you’re working within a smaller budget. Make sure you’re buying from a reputable seller and have access to the vehicle’s logbook and history.

  • It can save you money. Second-hand cars are considerably cheaper than new ones, making them a much more affordable option for many Aussies. There might also be more scope with used car dealers to negotiate on price, especially if you’ve done your research and know what to ask for.
  • Most of the depreciation has already occurred. A new car loses around 11%1 of its value the moment it leaves the car yard. During the first five years, it will lose an additional 15-25%1 per year on top of that! Buying a used car means someone else has taken the depreciation blow for you.

Financing your new car

Whether you’re buying a brand new vehicle or a second-hand one, a car loan can help take the sting out of the initial purchase. We offer car loans between $5,000 and $70,000, with a repayment period between one and seven years.

Keep in mind, interest rates are usually lower for new cars than they are for second-hand cars.

Buying a car is a big decision. But providing you’ve done your research and taken out a loan that meets your needs, you’ll be driving away in no time.

* https://www.finder.com.au/new-cars-vs-used-cars
^ https://www.mynrma.com.au/cars-and-driving/buying-a-car/car-loans/resources/how-do-car-warranties-work
1 https://propertyupdate.com.au/car-depreciation-rates-what-cars-hold-their-value-best-infographic