So, you've had a car accident and your car's a write off, you're buying your first car or it's time for an upgrade. Whatever the motivation behind your purchase, one of the first questions you'll need to ask yourself is whether it's best to invest in a brand spanking new ride or consider a well-loved set of wheels instead.
The pros of new cars
It's new and its ownership starts with you! With next to nothing on the clock, investing in a brand-new car means you're well placed to manage the kilometres it travels, and keep them down in the future. So, while this might not be something you're thinking about when you first get the keys, you probably should: it's a huge selling point when the time eventually comes to pass the vehicle on.
The fact that it's new means that it is covered by a new car warranty, so for the first few years at least, there shouldn't be too many additional out-of-pocket expenses beyond regular servicing, and it can give you great peace of mind.
While we're on the topic of cold hard cash, if you're self-employed and use the car for business purposes, you should get professional financial advice: tax deductions may apply.
New cars often come with the allure of heaps of modern safety features, and the latest gadgets, like maps, Bluetooth and even voice recognition. But what's probably more valuable is the innovation you don't see. Advancements in technology have made new cars, generally, much more economical than they once were. That's in terms of everything from fuel consumption, to their carbon footprint and capacity to run on alternative fuel sources, like electricity.
If you're using finance to buy a car, interest rates are generally cheaper for new cars.
Finally, if you appreciate good looks, your car's at its best when it's fresh off the production line – and we don't really need to mention that unmistakable pleasure of new car smell, do we?
The cons of new cars
Price tags are a big consideration if you're looking at new cars. They'll likely be more expensive than your second-hand options, so you might need to take out a loan to help you cover the cost.
But probably the biggest downside to buying a new car is the rate at which it depreciates in value. The moment your car leaves the dealership, it's worth significantly less than what you paid for it, so if you're planning on switching your ride regularly, be prepared to cover the costs.
To keep your warranty valid, you will also be required to maintain a servicing routine, and may be limited where and who can maintain the vehicle.
The pros of second-hand cars
If you're looking for a more budget-friendly option, then a second-hand car could be for you, and the best part is bang for your buck doesn't always mean you're buying a banger. You can get ex-demo vehicles that aren't technically 'new' cars, but have low kilometres, and ex-demo cars can often be eligible for lower interest rates, too – just like a new car. Many dealerships also run staff programs, where employees can switch to a new model after a year, at which point the older one is up for grabs, with minimal wear and tear.
Just remember, when looking at second-hand options, it's good to consider the number of kilometres on the clock, ensure there's a good service history and find out if it's been in any accidents. If you do your research, you could pick up a great set of wheels that's free of some of those new-car costs.
The cons of second-hand cars
While used cars tend to be more affordable than their state-of-the-art counterparts at the time, be aware there may be hidden problems – and costs – that manifest in the long run, depending on the age of the vehicle. It's always worth checking the service history thoroughly and if you know someone who knows cars, bring them along to take a peek under the bonnet.
Bear in mind too that if you're going seriously old school (15 years old or more), you're likely to struggle securing a car loan to cover the cost. You may need to lay the full amount out in cash or, if you don't have the funds to hand, your other option would be to take out a personal loan instead. Because personal loans are generally unsecured, don't be surprised if the rates are much higher than those for a car loan, which is secured against the vehicle – it's a compromise you might have to make. Feel free to have a look at our car loans here.
Whatever you choose, make it something you love, because there's nothing quite like getting behind the wheel of your dream car, turning up your favourite tunes and going for a cruise.