How to Choose Between a New and Second-Hand Car

We all know that feeling. Bringing home a brand new, spick and span car that you’ve just picked up at the dealership. It’s your pride and joy, with all the perks that come with a modern car.

Naturally, you’ll be content with your decision, but not everyone reaches the buying stage with as much ease. In this case, it’s worth tallying the pros and cons when it comes to buying a new car and second-hand vehicle.

Depreciation or security?

New cars depreciate in value as soon as they leave the dealership. When buying for private use, you may not be able to claim depreciation as a tax deduction.

Many people ignore this substantial cost because it is a ‘notional’ cost, whereby there is no cash impact after the initial purchase. Nonetheless, you shouldn’t overlook this cost, because a 40% haircut in value over the first three years is enough to dictate the flexibility of your ownership of said car.

Meanwhile, a new car offers security for a new owner. First of all, you are not buying someone else’s mechanical problems.

Secondly, if you encounter any manufacturing faults, these will generally be fixed quickly at no cost under warranty, particularly with manufacturers’ these days offering extended warranties of seven or even ten years.

Tying into this is a third point. Most of us need to take out a loan to pick up a ‘new’ set of wheels, even if it is second-hand. Typically, the interest rate on a new car is likey to be less than that of a used car, albeit this takes into account the higher purchase price that leads to higher interest costs over the loan.

The first owner of any car absorbs the steepest depreciation costs, so a second-hand owner benefits from a lower purchase price, a slower rate of depreciation, and lower insurance costs.

However, for all these savings, there are significant risks attached to buying a used car. These cannot and should not be overlooked. Not only is there a higher risk of incurring costs for unwarrantied repairs – and that owner’s manual is not easily verifiable – but maintenance costs are likely to be higher due to the car’s age.

Do you really want to run the gauntlet with the risk of a major mechanical failure a;ways looming?

Pricing or features?

New cars, particularly those made in the last few years, are substantially safer than older cars. They often have desirable features that a second-hand vehicle might not be equipped with. For example, modern-day essentials like autonomous emergency braking, reverse camera, rear-cross traffic alerts, blind-spot monitoring, and much more.

Some buyers achieve major savings while still enjoying most of the benefits of a new car by opting for a near-new demonstration model. In this case, you can find a car that is practically new but sold at a steep discount.

Alternatively, a ‘certified pre-owned’ vehicle can also bridge the gap between new and used. Pre-loved cars sold under this program are subject to rigorous inspection, and are usually covered by a manufacturer warranty.

At the end of the day, most buyers will come to a decision based on affordability. But the reality is, there are risks abound. You would almost be better served looking for a more affordable new car, than a discounted second hand that could be hiding all sorts of problems.

If you do opt for a used car, however, be sure to have it thoroughly checked out by a mechanic before you agree to purchase it, and don’t be afraid to walk away from the deal if things don’t stack up.

Do City Cars Still Have a Future?

Australians have long had a love affair with SUVs, with most of us only too keen to head into the outdoors, particularly in these times where we can’t travel abroad. However, the SUV format hasn’t only just caught wind in Australia. In fact, it’s a global phenomenon that has been taking place in numerous locations, most notably in China and the US.

The SUV format has become so dominant down under, it is consistently making up around half of all new car sales each and every month. Passenger vehicles have all but fallen out of favour, with light commercial vehicles outranking them on a consistent basis. While the sedan is showing little sign of gaining traction, there is one segment that is faring even worse – the city car format.

As more and more manufacturers ditch the format, is it a dying breed?

Design and practicality take over 

Of course, there are traditional SUVs that have drawn popularity for obvious reasons, but an emerging area in the car market has been new formats like crossovers and liftbacks, which have shaken up the design of cars as we knew them.

Offering levels of practicality and space that bring into question the versatility of the humble city car, these formats have taken off. Then you still have the traditional hatchback as well, which whilst on the slide, still has its niche position in the market.

With the trend clearly in place seeing more compact SUVs, crossovers and liftbacks developed in place of the city car, it’s hard to see this being overturned.

Furthermore, as urban sprawl takes us to destinations living further away from the city, Australians are more concerned with bigger cars that take care of all their needs. This contrasts with the likes of European cities where a compact car is important for smaller commutes in those tight and narrow laneways.

Locally, the humble city car hasn’t found traction among inner-city dwellers either, with an increasing number of young Aussies ditching car ownership altogether, instead opting for ridesharing services or peer-to-peer car rental services that certainly won’t be sufficient to ensure the survival of the city car format.

As each brand’s SUV line-up expands by the year, the writing is on the wall – city cars look likely to eventually fall by the wayside, even if that does become a drawn out affair…hopefully, it’s not before a select few manage to put up a fight and remind us what a shame it will be when they disappear for good.

Brand New vs Used Car: factors you need to consider

Purchasing a car is one of the most significant life decisions and investments anyone will make.

While there are many cars available to choose from, there is so much more to consider when deciding than just the make and model of the vehicle – like choosing between a brand-new car or a second-hand vehicle.

If you’re undecided, we’ve laid out a few factors you need to consider to help you decide which of the two options works best for your needs.

4 things you need to consider when buying a new car or used car

Whether to get a new or used car is an age-old debate.

People will have varying opinions on which choice is the right one – but we believe it’s important to lay everything out so you can make the best choice for your unique situation.

Here are 4 factors to consider before you make your final car purchase decision:

1. Reliability

   New car
   There is no doubt that buying a new car comes with a solid dose of peace of mind. A new car will be (typically) more reliable and less likely to break down or need repairs. And if anything does go wrong, your new car warranty (usually three to five years) will have you covered.
   
   Most new cars come with a certain warranty based either on total kilometres or for at least three to five years. If you plan on selling the car within the warranty period, it usually passes onto the new owner which can be a handy bonus to help you sell your car faster. 
   
   Used car
   The word “used” in the term “used cars” says it all – buying one of these means you are investing in a car that has been driven by someone else for a period of time. Simply driving a car around will lower that vehicle’s overall condition, which means it will have a shorter lifespan by the time you purchase it. Not to mention, there is no way of knowing how well or poorly a car has been treated by the previous owners.
   
   

2. Price

   New car
   Buying a new car is more difficult on the wallet. If you’re using an auto loan to finance the purchase, then you’ll most likely borrow more than you would with a used car and end up paying more interest over time.
   
   However, it’s important to remember that since the car has newer parts, this is also beneficial to your long-term costs as you won’t have to go in for checks and part replacement as often as you would with a used alternative. Running costs are just as important to consider when buying a car – and if you buy new, these will generally be less.
   
   Used car
   Used cars of up to three years old can hold value extremely well. On the other hand, cars over five years old generally offer much cheaper purchase prices. It’s also important to note that certain brands are depreciation monsters, meaning you can pick a car up a relatively new car cheaply. There’s also greater bartering potential, especially with a private sale.
   
   

3. Waiting time

   New car
   If you’re buying a new car, you might have to wait weeks or even months until you’re sitting behind the driver’s seat.
   
   If it has to be ordered from the factory and delivered from overseas, shipping times can delay the arrival of your highly anticipated purchase. For some buyers, this simply isn’t an option, especially if their current vehicle has broken and they need to get back on the road quickly.
   
   Used car
   Almost any used car listed for sale will be available, right now. A swift morning phone call to the seller could have you in new wheels by the afternoon.
   
   Of course, this ignores the lengthy search efforts to find a perfect vehicle for you, but at least once you have decided you’re unlikely to wait 12 months for the seller to supply the vehicle.
   
   

4. Depreciation

   New car
   Car depreciation is defined by the drop in a car’s value over time – and it occurs as soon as you purchase a vehicle and begin driving it on the road. This value decrease is quite rapid, with most cars losing 15% or more off their car’s value as soon as it’s driven out of the dealership, and up to 30% by the end of the first year.
   
   Used car
   Cars lose value with each passing month and kilometre, but the steepest decline happens right away as soon as the keys change hands. However, with a used car, there’s no depreciation the second you roll off the lot.
   
   There’s also less mental depreciation, and no need to worry about the first car park ding or rock chip in the paint because chances are the car’s previous owner or owners took care of those for you! That said, there may be some mental anguish when it comes to less obvious damage about how well the car’s engine was treated.
   
   

The important thing to remember is that buying a car is usually an expensive journey regardless of which option you’ll choose. Ultimately, after everything is considered, it comes down to your personal preference and unique needs.

Ready to buy a new car or a used car?

Whichever you decide to choose, it helps to have guidance from car-buying experts who can find you the best deals and make the experience seamless as you choose your dream car.

If you find that you still have general questions about your car financing options, our team at Private Fleet will be happy to answer your concerns and help you find the best deals for your car purchase. Simply reach out to us and we can have a chat about your options, regarding buying a new car versus a used car.

Make the most out of your car purchase with Private Fleet.

Private Fleet empowers you to get all the fleet benefits as a private buyer.

Backed by decades of industry experience, fleet buying power and a network of car dealers across Australia, we are here to make sure that buying a new or used car will be as straightforward as possible for you.

Buying a new car is a memorable experience – let us make it hassle-free, too.

Reach out to us today for a seamless and easy car-buying experience.

New Cars, New Year.

Happy New Year to you all!  2023 sees some brand new cars coming into view, and we’re set to observe a considerable increase in the number of EVs sold on our shores.  Here’s a brief look at some of the exciting cars and SUVs you can get your hands on in the near future!

Alfa Romeo Tonale

Here’s the first of the Alfas that take the special brand into EV mode.  The Alfa Romeo Tonale Hybrid kicks it off with its hybrid engine offering the new 48-volt hybrid propulsion system.  You’d expect an Alfa to be sporty, and the nicely designed compact SUV delivers on this front.  Comfortable interiors and decent technology make this a good way of upgrading into 2023.

BMW iX1

The smallest X model from BMW comes in as the X1, and the iX1 is the EV model with a battery range up over 400 km.  Nicely laid out interiors, an athletic driving style (typical Beemer), and a good dollop of performance make this a great new compact SUV.

BYD Atto 3

The BYD Atto 3 is a new kid on the block for Australia.  Being an electric medium-sized SUV with a decent range makes this an efficient EV for the new year.  The Atto 3 also offers a comfy interior and plenty of the latest technology and safety features.

CUPRA Born

CUPRA cars are exciting.  They have plenty of performance and are generally a well-priced product with high-end features.  This new model called the CUPRA Born is an EV with a handsome range of beyond 500 km.  The CUPRA Born is an exciting car to look at, and it comes with advanced technology and great connectivity.

Ford E-Transit

Ford’s lovable Transit has a new ticker with the latest vans now offering electric power.  This is a brand new, full-size, pure-electric E-Transit that features a 68 kWh battery and a driving range of up to 317 km.  Ford say that it is possible to fast-charge the E-Transit from 15% to 80% in a bit over 30 minutes.

GWM Tank 300

One of the best vehicles to come out of 2023 will be the impressive looking GWM Tank 300.  Doesn’t it make a statement!  The Tank is powered by a 2.0-litre petrol-electric hybrid system, and the internal-combustion engine offers a juicy 180 kW.  Nappa leather, all the tech, and very handy off-road makes this a hugely appealing.

Lexus RX

Toyota has their luxury Lexus brand offering their latest RX.  If you’re wanting a new hybrid, these are some of the best ones out there.  Toyota make a great hybrid powertrain with smooth performance and impressive efficiency.  The RX interior sees an updated luxury interior design with ever-impressive build quality.  The RX is roomy too and very comfortable.

Maserati Grecale

Maserati is becoming ever more affordable.  That’s a great thing because they make great cars.  The new Maserati Grecale is a front-engine, medium-sized luxury SUV that comes with the promise of plenty of performance.  Three engines are available: two 2.0-litre petrol motors and a 3.0-litre V6 petrol.  Generous on the equipment levels, the Grecale will be rewarding to drive.

MG4

MG offers the new MG4 hatchback this year.  It is an affordable electric hatchback that has been packed full of innovation, style, technology, and an impressive 440 km driving range.

Nissan X-Trail E-Power Hybrid

Nice to look at, and equally at home off-road as it is on, the Nissan X-Trail E-Power Hybrid SUV is very comfortable and very well-equipped.  Rear cargo capacity in the 5 seat version of this awesome SUV is 575 litres (super handy for a family).  A 7-seat option is also available.  The entry point model is a mild hybrid version and uses a 1.5-litre petrol most of the time.  The other powerplant uses the same 1.5-liter ICE, but it doesn’t connect to the wheels directly.  Instead, it becomes the electrical generator of the system that works in unison with a small battery operating as a buffer.  The wheels are fed power via electric motors.

Renault Kangoo

Renault’s new Kangoo definitely can do, especially with its brand new E-Tech EV versions becoming available for the Australian market.  This will be Australia’s cheapest electric van.  The E-Tech has a 90 kW/245 Nm electric motor that drives the front wheels via a single-speed transmission.  You should easily run about town for well over 250 km before needing to recharge.

Keep your eyes open for these new models travelling our roads and on showroom floors across Australia.  Also keep your ears open via Private Fleet, where we’ll keep you up to date with what other new models are coming our way shortly.  All the best for 2023!