Is it Worth Buying a New Car?

The most obvious thing we're considering when looking at new and used cars is the price. There’s no denying that brand new cars cost more upfront. For many people, this is probably going to be the deciding factor. Having the money to purchase a new car is one thing, but the depreciation could be a pain point if you only want to hold onto the car for a short time. On the other hand, used cars come with lower price tags, and they often depreciate less during your ownership.

Car finance has become a highly competitive industry. That’s great news for anyone who’s looking to buy a car. Lots of dealerships, banks and finance companies provide affordable options that can be used to buy both new and used cars. But there’s one major thing to consider: finance companies love low-risk levels. That means the finance options available for new cars are usually more affordable than for used cars. Lower interest rates and favourable repayment options can save you thousands across the life of a loan on a new car.

The value of used cars is harder for insurance companies to pinpoint, and it presents an issue for their risk assessment. Like we’ve seen in recent years, the prices of used cars can fluctuate, and lenders are worried about being left out of pocket if the price of your car drops unexpectedly. For that reason, you can often expect to pay more for finance on used cars, usually in the form of higher interest rates, shorter loan terms and higher repayments.

There’s really no way to fake that new car smell. Part of what you’re paying for with a new car is the fantastic condition. Fewer kilometres travelled means things like the engine and cabin will be in better shape than its used counterpart. That newness comes with a few benefits, one of which is warranty coverage. Car manufacturers are now offering better warranties than ever before, keeping you covered for 3, 5 or even 7 years in some cases. Used cars are often also available with warranties, but they tend to be much shorter offerings that typically only protect your purchase for the next 6 or 12 months. That can turn out to be a big deal if you don’t know the history of a car and whether or not it has been cared for or regularly put to hard use.

Maintenance and Servicing

A brand new car might cost you more upfront, but they often save you money at the mechanic’s workshop. Cars live hard lives, especially in Australia where we often cover long distances on hot days. That means their components wear out and that sooner or later all cars need replacement parts.

While there’s no such thing as a perfect car, and even new cars have been known to fail or develop engine problems, chances are that used cars will need more servicing, sooner. Even when a car is a few years old it can be due for major services and other expenses like new tyres. Compared to the relatively hands-off maintenance involved with a new car purchase, used cars don’t always offer the best deal. Many dealers now also offer capped prices and prepaid servicing options that make the ongoing costs of a new car even more affordable.