Buying a car is one of the most important decisions of our lives. The market is flooded with many different car options which could prove a headache for many buyers. When looking at purchasing any car, there are certain factors you should consider prior to putting money down. So, what type of car should you choose, new cars or used cars?
Here is a full breakdown:
New car sales offer customers an abundance of options. Every year we see different releases of new cars from leading car manufacturers such as Toyota and Ford, so as a buyer you will always have options available. A flooded new car market can be hard to stay on top of when researching. Here is a list of advantages and disadvantages of buying a new car:
Latest features: Buying a new car gives you the latest features available in the market. This includes the latest safety standards, size, speed, accessories and so much more.
Fuel efficiency: New cars offer buyers the latest advancements in fuel efficiency. With petrol prices constantly rising, having the most fuel-efficient vehicle can be a great advantage over used cars.
Manufacturer and dealer warranty: New Cars offer buyers full warranty on the vehicle for about 3-5 years depending on the terms of the sale. Manufacturer warranty is an incredible factor for buyers as this covers you from any faults you may experience or any future recalls that do happen on occasion. New Car Dealers are competitive, some dealers also offer free service with a new car purchase.
Financing options: New cars offer buyers with wider financing options from multiple lenders. Used cars on the other hand give buyers a limited lending options and a much longer approval process of due to factors such as age, value, and warranty. New cars give lenders confidence with the latest technology and static depreciation value over the time of the loan.
Price: Like everything in the world, when a product is new and in demand, the price will be high. New cars offer buyers a variety of positives with the new features, but due to demand buyers will need to pay a significant amount as compared to a used vehicle.
Constant Options: A key disadvantage of new cars is the multiple options on the market for buyers. We constantly see new releases of car models every year. As a buyer of a new car you should always know that there will be another advanced model on the market.
Depreciation Almost automatically after driving the new car out of the dealership, the new car will lose value. A new car has its largest value in the first year then the value will decrease suddenly. This means if you choose to sell the vehicle soon after the time of purchase you will not get the amount that you paid for it.
Similarly, used cars are constantly available to buyers, whether it be online through channels such as carsales.com.au and Facebook Marketplace or at your local used car dealership. Everybody in their lifetime experiences selling their used car, but with many different used car models available on the market what are the advantages and disadvantages you should be aware of?
Cheaper: Used car sales are constantly growing in Australia. As such, used car dealers offer buyers great deals at a significantly cheaper cost compared to new cars. As new cars depreciation falls rapidly after point of sale, you do not need to worry about the rapid loss of value as it would of already passed the sever depreciation loss timeframe. With a lower depreciation, dealers can sell used cars at a lower price which means more savings for you!
Smaller loan: As the purchasing price of a new car is lower than new cars, this means your loan amount will be a fraction of what a new car loan may be. This gives you the ability to pay off the loan in a quicker timeframe and remove costly interest rates. In addition to this, with a larger deposit you can slash a significant amount of the loan which in turn will save you potentially thousands of dollars.
In Australia all used car dealers are obliged through government law to provide all information of the used car history and background to all potential buyers. For a buyer this gives you the upmost information about the vehicle and if they have been through a recall.
Lower insurance fees:
Used cars offer buyers a lower insurance fee as compared to new cars. Insurance fees are dependent of a few factors such as the primary residing location of the vehicle, age of the vehicle and most importantly value. As used cars are a cheaper alternative for buyers, this means the value of the car will be considerably smaller than a new car. This can save you thousands of dollars a year in insurance premiums.
Ongoing costs: A key disadvantage of used cars is the ongoing costs such as service and maintenance. Due to the age of the vehicle, the used car would need regular attention to stay road compliant. Ongoing costs for maintaining and owning a used car is far greater than new cars.
Fewer finance options: Lenders want to make a profit on the loans they give their customers. A key component that the bank basis the loan on is the value of the asset. With a lower valuation on the car this increases the risk to the lender, meaning options are considerably smaller as some lenders may not want to take the risk.
Limited to availability: Buying a used car comes down to availability. With a new car you can go into a dealer and let them know the type of car you want. With used cars you are tied to what is available in the market. For example, if you want to buy a used Toyota Hilux but no used car dealer is selling it, you will either need to wait for one to enter the market or search for another model.
Warranty: A key issue of buying a used car is they have generally passed the warranty period. Some dealers may offer warranty for the used car, but this depends on the deal on hand. Opposing this, new cars offer buyers full warranty under Australian consumer law.
When buying a car there are a variety of options you must consider, both new cars and used cars have great advantages and disadvantages. We suggest you obtain the upmost information about the vehicle you may want to purchase before putting money down.