New Or Used?
18-September-2007
Lola decided to buy a new surfboard instead...
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Buying a car can be confusing at the best of times, but deciding if you should buy a new or used one is just as puzzling as why celebs can't seem to afford a cab when half-sizzled.
Let's start with the case for the brand-spanking new car
You may pay more at a dealer for a new car but you have more guarantees. These include:
Aside from the excitement of buying a new car (complete with the joy of the new car smell), there are many other advantages. For example, a new car warranty can cover you for up to five years or 160,000 kilometres (hello peace of mind). Also, you know what they say: new car, clean slate no history and (fingers crossed) no worries. Plus, spare parts are likely to be more accessible, it's cheaper to finance and the best thing of all, you can tailor it to suit your every need.
The downside?
This is the first thing that happens – new vehicles depreciate quickly. David Smith, Motor Trader Association NSW.
The most obvious factor weighing against buying a new car is its depreciation and sometimes, higher insurance rates (depending on your car). A new car can depreciate by up to 30 per cent before you even drive it out of the showroom. Keep in mind that it does make good financial sense to upgrade your car every three to five years and this should definitely be factored into trading-in your old one, because once a car gets past its used-by date, you end up spending more (in servicing and maintenance costs).
Let's now take a look at the benefits of buying a used car
If you're in the right place at the right time, you can get a used vehicle for a bargain. David Smith, Motor Trader Association NSW
It's completely possible to bag a bargain with a used car; yet to find the right one, you may need to apply the same attitude you need for vintage clothes shopping – it's all about investing time and stamina. Some benefits? A used car's depreciation rate plateaus after the first year. This can mean you may in fact be able to afford your dream car, a luxury that may not be possible when new. To add fuel to this debate, you've got lower insurance rates and lower monthly repayments. Additionally, if you wanted a lemon you'd go to you local grocer right? Eliminate this risk by enlisting an NRMA and REVS check (but again, these things all take time).
The flipside?
It may be cheaper to purchase a used car initially, but you have to be certain you're not inheriting another's problem.
The obvious flipside to purchasing a used car is the uncertainty of its future – whether it be its unknown history or limited, if any, warranty. And don't forget stamp duty – you pay three per cent of the purchase price to transfer the car into your name.
At the end of the day, whether you decide to buy a new or a used car is completely dependant on how much time vs how much money you're prepared to invest. Often, when looking for a used car, you're signing up for more research. Also, you have to ask yourself how long you're planning to keep the car because if you're planning to keep it for a long time, it's probably worth investing in a new one. With new cars now being so competitively priced, you can definitely find a great price for a new one but the same can be said for a used one. It really does all boil down to how much money is in your pocket and how much time is in your hands.
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