Buying a new car versus a used car

Should you buy a new or used car?
  • There are lots of reasons to buy a car new instead of second-hand
  • It can be more convenient and enjoyable to buy a new car, and there are some worthwhile cost savings to go with it
  • But buying a near-new used car can save you a large amount due to the steep deprecation on brand new cars

New car vs used car pros and cons are worth understanding when you are buying a car.

There are a number of reasons to choose a new car instead of a used car, and just one highly persuasive reason to stick with a second-hand car instead.

8 Reasons to buy a new car

  1. It's new - It will have that heady new-car smell, and you’ll know no-one has driven your car - its ownership history starts with you.

  2. You get a warranty - Most new cars have at least three years' warranty (capped to at least 100,000km).Some have up to seven years' cover, which is as long or longer than many people own their cars for. You'll have reliability and peace of mind the whole time you own it, and if there's any remaining warranty, it's often transferrable to a subsequent owner, which will make your car easier to sell.

  3. Ease of purchase - If you've established which brand and model suits you, and made sure it's a fit for you, your family and your driving tastes then you can go ahead and buy it without the need for mechanical inspections, title (ownership) checks, or any of the hassles of finding ‘the right car’.

  4. You can choose exactly the car you want - When you buy a new car, you can have it in your chosen colour and specification level with exactly the extras you’d like. By choosing a popular colour and features it will be easier to sell in the future, too.

  5. The latest features – Okay, you don’t need to have every modern convenience, but it’s pretty difficult to overlook the rapidly advancing active safety technology available in new cars, such as autonomous emergency braking. If there’s one thing you can’t put a price on, it’s safety.

  6. Lower running costs – Insurance is less costly for new cars; the insurance company’s algorithm for calculating risk takes into account real crashes. So you will pay a lower interest rate on a loan for a new car compared with a used one and, thanks to the widespread adoption of fixed-price service schemes you’ll pay a known, fixed cost for each service.

  7. No registration inspection – You don’t have to obtain a pink slip inspection for your car at registration time during the initial years of ownership, so the whole renewal process can be done easily online.

  8. Finance is cheaper – If you're using finance to buy a car, rates are cheaper for new cars.

The advantages of buying a used car

The most convincing reason to buy a near-new used car rather than a brand-new one is depreciation.

New cars typically lose around 30 per cent of their value in the first three years. Some lose more than this, while other popular models (private sales, not fleet models) often lose less. As a result, it’s possible to save a lot of money on a newish second-hand car.

With time, skill and some wise used-car shopping, you’ll have the best of both worlds – a car that looks and feels almost like new and big savings on the price.

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