If you’re in the market for a new car, choosing between a new or used car can be a difficult decision. Whilst a new car may come with the latest technology, great safety features and a host of other benefits, the cost may be out of reach. So what are the benefits of new and used vehicles, and what should you consider when buying a car? We have the answers.

New Cars

Positives

You know what you are buying – New cars offer peace of mind as they are generally less likely to break down or have mechanical issues. You can choose the exact vehicle and specifications you want and have the added security of scheduled servicing and manufacturer’s warranty. Many manufacturers now offer capped price servicing for up to 5 years which means you can factor this into your budget so you know exactly what you will need to pay.

Better Interest rates – If finance is something you need to factor in to your car purchase, most lenders will give you a better deal on a new vehicle over a used one. Going through a broker will also allow you to source the best possible deal.

Fuel Efficiency and performance – With technology changing all the time, buying a new car can mean you get the benefit of the latest technology and safety features. Manufacturers often run promotions with free upgrades or run-out models which can also mean you get a great vehicle at a lower price.

Negatives

Depreciation – Whilst a new car may sound attractive, if you plan on reselling it at some point, it’s worth considering how it will depreciate. In simple terms, just about all cars will lose value the minute you drive them out of the dealership.

Recently, a friend of mine purchased a secondhand 2004 BMW 7 series. Originally when the vehicle was purchased, it was over $170,000. The guy my friend bought the car from explained that when he bought it five years before, he only paid $60,000. So, in six years it had lost 65% of its value. My friend bought it for $10,000 – less than 1% of the original sale price!

Used Cars

Positives

Purchase Price – generally, buying a used car will cost you less in terms of the purchase price. If you do your research, you’ll quickly discover there are some great used cars out there that are well maintained and good value for money.

Last year, we were in the market for a family size SUV that was great for city driving, and capable of off-roading. We wanted 7 seats, reliability and comfort, all on a relatively small budget (as far as off-roaders are concerned). After weeks of research, and a few test drives, we purchased an 2014 ex-demo Ssangyong Rexton. It had all the features we needed, but as an ex-demo, was considerably cheaper than buying a new one. We received the balance of new car warranty, and now have a great vehicle that cost us thousands less than we thought.

So many options – search on a car website for a used vehicle and you’ll quickly find there are thousands of vehicles to choose from – no matter your budget. This means that you will always find something you can afford with features you need.

Negatives

Ongoing costs – when looking a used cars, it’s always worth looking at the overall running costs to maintain that vehicle. Whilst you may pay less for it, this can be a false economy if you have to repair the car. Always get an inspection done on the vehicle before purchase and do your research to ensure you are getting it for a good price.

Private sales can be risky – many years ago I purchased a little hatchback from a private seller. As a 19 year old, I was super excited to be buying, what I thought, was a cool little car. Having no idea about cars at all, I looked at the engine, decided it looked clean and bought it. Three weeks later, I had a car that was barely drivable and sorry bank balance. Always check out who you are buying from, and if you are purchasing from a private seller, be aware of the risks and get the vehicle independently checked.

Buying a car can be a major financial decision and often a stressful one. With so many things to consider, always do your research and make sure you get the right vehicle for you. When it comes to finance, enlist the advice of an independent mortgage broker to make sure you get the right loan for you.

Find out more about car finance.

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