The choice between a new or used car can sometimes be very difficult.
Are you able to afford the new car that you want (or need)?
Do you need your car now or in the future?
Are you taking a risk buying a car that has been owned by someone else first?
We have researched the advantages and disadvantages of buying new vs used cars so that you can make an educated decision!
Weighing up the pros and cons of buying a brand new car against buying a used car
In Australia, there are approximately 1.1 million new cars sold each year.
Although it is harder to measure the number of used cars sold due to private sales and marketplaces, a survey completed in 2021 showed there was roughly and even split between people who bought a new car and those that bought a used car1.
Interestingly, of the people that bought a car in 2021/2022, they were more likely to buy a used car than a new one2. But why?
For many, it starts with a budget!
It should come as no surprise that for many people considering buying a car, their budget is probably one of the biggest deciding factors.
According to the ‘Auto Futures: Journey to Vehicle Ownership’ study, on average, consumers make approximately four dealership visits (to the same or different dealerships) before purchasing a vehicle with prospective buyers willing to travel more than 80kms to get a better deal3.
Whether the old clunker has taken its final rumble or a surprise new addition is joining the family, the choice between buying a new or second-hand car will almost always be influenced by the price of the vehicle.
Gone are the days of brand loyalty, consumers are now looking for increased affordability rather than their favourite car brand4.
Beyond budget, there are many other important things you need to take under consideration before making a final decision.
The second-hand market can certainly offer competitive prices, however, it does come at the cost of reduced warranties and buyer security. It may however give you more bang for your buck when it comes to interior space and features.
The Advantages of Buying a New Car
In modern consumer culture, a new automobile is undoubtedly a symbol of success. There is no question about an automobile's beauty in its curb appeal.
In addition to cosmetic benefits, a new car has several advantages:
New car warranty
When buying a new car, you will have peace of mind when it comes to roadworthiness. You can rest assured that any fault that occurs can be covered by the manufacturer's warranty, especially in the first three years. New car warranties are generally between 3 and 7 years, with some dealers offering longer terms.
Capped price servicing
If you buy a new car, you will most likely be given capped-price servicing. Your dealer will offer you a fixed price for your dealership services for an agreed upon amount of time. That means there will be no surprises when you take your car in for its first few years of maintenance.
Latest features
You don't have to be a tech expert to appreciate all the features a new car may have. Think bigger screens, parking assistance and customisation. Whether you want the latest gadgets, a sunroof or 365 degree cameras, most new cars can be upgraded or personalised to suit your needs (and budget). Cars these days can all but drive themselves, so a new car will definitely offer high-tech appeal.
On road costs
Aside from purchasing insurance, when you leave the dealership, there really shouldn't be any costs other than a tank of fuel perhaps (or a sneaky upgrade like window tint or paint protection).
Paint colour
While this isn't an advantage for everyone, why not have your cake and eat it too? When it comes to buying a new car , you can choose the colour yourself. Whether you choose a bold colour, a shimmering metallic or a colour-blocked roof, you won’t have to settle for a colour that you haven’t chosen yourself. And when it is time to decide, you may just want to consider how colour could potentially impact the car’s resale value. For example, a bright pink or yellow car may not have the same buying audience as a grey or white one.
New car smell
There is nothing nicer than a new car smell. So when you buy a new car, you will be able to appreciate the long-lasting scent of fresh interior and new car goodness. You will also be able to acknowledge that there have been no pets, no smokers and no spills of any kind.
Future values
Everyone wants to be able to make a small return off their purchase one day, so buying new (and taking care of it) could see you get a decent return when it comes to the resale of your vehicle. The used market can be quite competitive, so by upgrading sooner rather than later, the value of your car could be quite impressive.
The Advantages of Buying a Used Car
Pre Owned cars may have a different semblance to a new vehicle, but there are still some advantages to buying a car that comes with a little extra personality.
Better value for money
Depending on the car you buy, you may be able to get a bigger or better model for a cheaper price. A brand-new SUV or utilitarian pickup can be quite pricey, so buying second-hand may allow you to have those extra seats you need along with the preferred features you desire. You may also be able to consider a more premium brand that perhaps may not have been in your price range before.By the time a vehicle is put on the used-car market, most of its devaluing has already happened (and is accounted for by its previous owner). So purchasing a used car is also a great way to get more value for your money when it comes to forgetting about depreciation.
Manufacturer warranty
Now, not all cars are past their warranty. Would you believe that some even come with 10 years worth of manufacturer warranty? So, buying a car that is only 2-3 years old, may have similar ongoing costs to a new car. And, if you're buying through a dealer you may get an additional dealer warranty on any used car that you buy anyway. So it's a win-win.
It could be near new
If the last owner decided to upgrade (or downgrade) and they have only clocked up a few thousand kms, the chances are that the car is fairly new. Some people decide to sell quite quickly for various reasons, so you may just be getting a near-new car for a substantially cheaper price.
The Disadvantages of Buying a New Car
While there are so many advantages of a new car, it does come with its own downsides.
The price of buying
Are you taking out a loan to buy your new car? The cost of a new car could see you well above $30,000 these days, so you may need to consider getting a slightly larger loan than you once thought. Of course, with finance you also need to consider the interest rate and buying full comprehensive insurance before you can buy the car.
Depreciation
Ever heard people say that your car loses money the minute you drive off the lot? Well, it's true. Unfortunately, your brand-new ride is worth less than you bought it for the second you take it for a spin. So if you are the low-commitment type and like to upgrade often, it's important to consider the depreciation of your new vehicle each time you make the switch.
Waiting times
The market is slowly improving however there are still considerable wait times for some new makes and models. For example, some brands were experiencing delays due to chip shortages and others due to parts, so if you need a new car as soon as possible, you will have to take a look at the waiting times to see if the delivery timeframe is feasible.Data suggests that the wait time for a new car can be anywhere between 60 and 289 days5 depending on the brand, make or model of the car.
Limited options for servicing
Although you may enjoy the benefits of capped price servicing, you will be limited as to where you can take your car for a service. With most new cars, you will need to take it back to the dealer to be serviced, and that doesn’t always mean it will be the best price if your models, parts or additional fluids aren’t included.
The Disadvantages of Buying a Used Car
We try to keep it positive around here, but just like new cars, there are some disadvantages you should know about when it comes to buying second-hand.
Older cars have a history
Not all car owners are dedicated to the well-being of their four-wheeled friends. While some decide to keep the logbook up-to-date, others may have left it collecting dust over the years. There may also be a few prangs or auto-issues that may not be disclosed.
More maintenance
When it comes to a used vehicle, you will have to be prepared for any maintenance it may need in the near future. Whether it's a set of new wheels or a change in brake pads, it could be more expensive in the long run.
Wear and tear
Like any car purchase, you will experience wear and tear over time. It could be minimal if the car has been kept in a safe place and cared for, or it could be substantial if left out in the weather. You can expect anything from faded paint, dings in the doors, tears in the seats and even sand in the interior (which is impossible to remove). If the car belonged to a smoker, there could also be smoke damage to the roof or interior.
The choice isn't always yours
If the look of your car is super important then buying a used car will certainly limit your choices when it comes to colour. Of course, you could choose to have it repainted or wrapped, but if you're set on a certain colour and style, it may make it a bit more costly to change.
Is Buying a New Car Worth it?
You may think new cars are the surprise winner, but it's not always the case.
With any car, you should weigh up the pros and cons, consider the service history and take it for a test drive to know exactly what you are getting for the price you are willing to pay.
Want the best value for your money? Why not consider a car subscription? You can try before you buy, and enjoy all of the perks of traditional car ownership with none of the commitments. And, if you're someone that likes to switch up your ride, it can make it a lot more affordable to swap vehicles at short notice.
1 https://www.budgetdirect.com.au/car-insurance/research/australian-car-sales-statistics.html#30-car-sales-survey-results
2 https://www.budgetdirect.com.au/car-insurance/research/australian-car-sales-statistics.html#30-car-sales-survey-results
3 https://www.marketingmag.com.au/news/how-the-modern-australian-goes-about-buying-a-car/
4 https://www.marketingmag.com.au/news/how-the-modern-australian-goes-about-buying-a-car/
5 https://www.canstar.com.au/car-insurance/new-car-delivery-time-australia/
