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New Or Used Car

Your capacity to pay for a new car will likely be the first, and probably most definitive deciding factor when choosing between buying a new car or used. But if your finances allow a choice, which should you go for? Is the cost equation as simple as it looks? Do the hidden costs of a used car outweigh the up-front savings?

Of course, there are immediate cost advantages to buying someone else’s losses, and on past occasions I have secured fantastic deals on modern used cars in good condition. After a careful check by the state Roads and Motoring Association, I have closed a deal with confidence that the vehicle is basically sound and any problems have been exposed. And in every case the car proved a sensible purchase, and gave our family years of good service.

For almost forty years, my husband vowed he would never buy a new car, and he advised our children against it too. So it was a big surprise when he recently drove out of the showroom in a shiny new vehicle. What changed?

The influencing factor, for us, was always depreciation. Drive a new car out of the showroom, and its value instantly drops. The moment it becomes a ‘used car’, it is worth thousands less.

To be fair, I should add that we have a passion for restoring and rebuilding old cars. My husband will tell you no car has ever been made that comes close to matching his old EH Holden for looks and performance. And he considers the F150 truck a work of art! But when it came to choosing a vehicle to pull our new RV around Australia, technological advances meant a new car won hands down. With the rapid advances in technology and safety, new cars offer strong advantages over used for the majority of car buyers today.

For us, rebuilding an older vehicle was ruled out because of the high cost of replacing the engine and the poorer fuel economy in older cars. Parts have become very expensive! Bringing older cars up to current safety and greenhouse gas emissions standards is a challenge. So we had to choose between a more modern used car and a new vehicle.

We were surprised to find that late model used vehicles hold their value very well. Aggressive bargaining with new car suppliers resulted in a bottom line only a few thousand more than the price of a two or three-year old car with 50,000+ on the clock. Access to the Internet to compare deals nationwide, and to brokers like Private Fleet to negotiate deep discounts on new car purchases, make list prices on new cars almost irrelevant. The increasing trend to consignment of used cars means dealers are under less pressure to clear stock quickly, and might not be quite as open to aggressive discounting as the new car dealer. And warranty laws impose cost risks that have to be factored into their pricing.

Then we looked at fuel economy, safety, and those little ‘creature comforts’ like the music system, climate control, in-car storage and cup holders, seats, and interior lighting. Car manufacturers have been working hard in recent years, and have delivered some outstanding design improvements. Even comparing with quite late model used vehicles, we found new vehicles offered much more.

Used cars often come with a few extras added by the previous owners, but we found it relatively easy to get competing dealers to offer to throw in things like rubber mats, driving lights, towbar, and even a bullbar at no extra cost. It seemed almost anything was ‘on the table’ if it meant winning our business!

The deciding factor, for us, was warranty and insurance. Many new cars now come with a 2 year warranty and roadside assist, and you can extend that to five years and 150,000km at quite minimal cost. Car dealers are offering low cost insurance policies with three-year new car replacement and many appealing little extras. Five years worry-free driving, with only service and petrol costs to budget for, was an attractive proposition!

By comparison, a used car might come with only a three month warranty, and you can’t really be sure that you aren’t buying someone else’s nightmares. Three months isn’t always long enough to find and resolve all faults.

Even when comparing a six-month old vehicle with only 4,000km on the clock, we had to consider that the owner might not have followed the correct run-in procedures, and early neglect or abuse might reduce engine and gearbox life or cause parts damage that would result in premature repair costs.

For those who need to finance their purchase, interest rates on new car finance are lower than for used, and a wider range of financing options are on offer.

For many, a new car will be out of the question based on price. A wide selection of good used cars in the marketplace; plenty of dealer competition; and laws to ensure vehicles are safe, roadworthy, and sold with some warranty, mean used car buyers have plenty of choice and can often secure great deals on cars that will deliver long-term service and enjoyment quite economically.

If you can afford new, though, there are considerable advantages. By aggressive negotiation or using the service of a broker like Private Fleet, you can often save thousands on the list price. You get to choose your preferred colour and options. And there is something very special about owning a brand new shiny vehicle with that distinctive ‘new’ smell inside—even if it does only last a short while!