Before purchasing a car, you will need to decide on whether to get a new or used vehicle. Doing your research and weighing the pros and cons of both can help you decide what’s best in the long run.
When it comes to buying a car, it’s easy to get excited at the thought of owning the latest model with new features and stunning leather seats. However, if you have a specific older model in mind or if you plan on using the car for work you might prefer purchasing a used model. Here’s a look at the advantages and downsides of each.
Buying a new car
It has to be said, there’s nothing quite like the feeling of owning a brand new car –not to mention the new car smell.
With a new vehicle, you get all the bells and whistles. You can choose a model with the latest features, most likely get a warranty that lasts three to five years and, depending on your dealer, benefits like capped-price servicing.
You also get to choose which optional features you want on your vehicle, such as the trim, colour, wheels and more. In short, you can get the exact car you want, and it's unlikely you'll need to spend anything on it for quite some time.
New cars also tend to break down less than used cars, and if serviced correctly they can remain mechanically sound for the first few years with very few problems.
The downside is that most brand new cars can quickly lose a significant percentage of their value due to depreciation within the first few years of ownership. Depreciation rates can vary depending on the type of vehicle, and how it's used. Additionally, because of the replacement cost, insurance on a new vehicle will be higher than on a used one.
Buying a used car
As long as a vehicle has been well looked after and regularly serviced, you might also consider buying a second-hand car.
Because of depreciation, used cars are considerably cheaper than new ones. If the car is only a couple of years old, it might still have some years remaining on the warranty and servicing you can use.
A downside of buying a used car is that you’ll have to take the car as is. However, there are thousands of used cars available for sale in the market. Take the time to look and you’re bound to find one that ticks most, if not all, of your boxes.
Buying from a private seller carries certain risks, so ensure you do the proper checks. Doing a PPSR check on the vehicle will let you know that the car has been registered, if it has been reported stolen or if there’s money owed on it. It is also worth considering an asset inspection report from a reputable company prior to purchasing a used vehicle in a private sale.
Demonstrator models can prove to be a cheaper alternative when purchasing a car. These vehicles often have a few thousand kilometres on the clock, but can be far cheaper than purchasing a brand new one.
Many factors can influence your buying decision, and while each make and model can appeal differently, knowing what you want most out of a car is key in helping you decide whether to buy brand new or go second-hand.
All applications are subject to Pepper's normal credit assessment and loan suitability criteria. Terms, conditions, fees and charges apply.
This article provides you with factual information only, and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser. Neither Pepper nor its related bodies, nor their directors, employees or agents accept any responsibility for loss or liability which may arise from accessing or reliance on any of the information contained in this article. For information about whether a Pepper loan may be suitable for you, call Pepper on 13 73 77 or speak to an accredited Pepper Money broker.