It’s time to change wheels – but should you buy a new or used car? There are advantages to each choice but much depends on your current financial situation.
In the end, the choice comes down to a number of personal things: your preferences, your tolerance for risk, and what your finances can really afford.
Here’s a closer look at what new and used vehicles have to offer so you can make the best choice.
What are the advantages of buying a new car?
The main advantage of choosing a new car is peace of mind. New cars come with full factory warranties, which means no out of pocket expenses for repairs or regular maintenance for a while.
Other advantages include:
- Special deals from dealerships, such as low-cost financing, no deposit or cashback.
- A chance to customise the car and add optional extras to fit your own personal specifications.
Should I buy a used car?
The most obvious advantage of a used car is that it will cost you less. Plus, buying used means there’s a bigger chance you’ll be able to come up with the amount in cash and save money on interest over time.
Another reason buying used makes sense is that you don’t take a big depreciation hit. A new car can lose up to 40% of its value in the first few years you own it. Buying a used vehicle means somebody else already paid most of the depreciation cost.
Plus, you can buy a vehicle that’s only a couple of years old and in great condition and pay a lot less.
Should I buy new or used? Making a final decision
What can you realistically afford?
Are you able to put together enough money to buy a car in cash? Can you wait to save enough to buy in cash? If you have to finance your car, can you afford the monthly payments? Certified pre-owned vehicles can sometimes be financed but the monthly payments will be lower than those for a brand-new car.
What about car insurance costs?
New cars are more expensive to insure, which can significantly push up your premiums. Used cars are cheaper to insure in general. It’s best to insure your car under a fully comprehensive plan, but other insurance options are available if money is tight.
Can you afford repairs?
It’s hard to know how well previous owners treated a car, so you might end up spending a lot of money on maintenance and repair. Even worse, you might end up buying a vehicle where issues go undetected until later on, costing you a lot.
Certified pre-owned cars could offer a middle-ground solution. They are likely to be covered by a limited warranty that would reduce your maintenance costs, at least for a while.
Do you have a good credit score?
If your credit score is poor, you might not get a good interest rate on a loan. This will add to the price of a new vehicle significantly over the life of the loan.