Used Car Vs New Car: Which is Better to Purchase?
Buying a car in Australia has become more common, thanks to increased income and accessible car loan options. However, the decision-making process involves considerations like new vs used, car type (hatchback, SUV, sedan), and the reliability of second-hand cars. In the past, finding a reliable used car was challenging and time-consuming through local dealers or classifieds.
Now, the landscape is evolving with the growth of the organised pre-owned car industry. We, at CARS24, offer certified used cars with a 7-day return, 100% money-back guarantee and a comprehensive 3-month warranty. This shift in mindset is driven by the assurance of finding a used car in excellent condition, similar to a new one. The demand for certified pre-owned cars is rising, with a significant advantage being the potential savings of thousands in the initial investment compared to buying new.
Used Car Vs New Car: Which is the Right Option for You?
Choosing between a used car and a new car is a subjective decision, and the right option depends on your personal preferences and financial circumstances. Ultimately, you should select the one that best suits your needs. Some key factors that could be considered:
- Affordability and Savings:
Affordability often guides the decision, with used cars offering potential savings. The money saved can be utilised for customisation, savings, or future maintenance costs.
- Condition and Age of the Vehicle:
Consider the condition and age of the used car, with well-maintained options readily available due to frequent vehicle changes. You can find relatively new used cars with low mileage at a significant discount compared to new ones.
- Availability and Frequency of Model Changes:
The frequency of people changing cars has increased, making it easier to find good used cars in the market. You may find nearly new cars with minimal mileage, providing a cost-effective alternative to new vehicles.
- Features, Safety, and Reliability:
Regardless of being new or used, prioritise features, safety, and reliability when making your decision. Ensure that the chosen car meets your requirements and serves its purpose well.
Advantages of Buying a New Car Vs Used Car
Explore the advantages of buying a new car below.
- Perhaps the biggest advantage of buying a new car vs a used car is the manufacturer’s warranty. It goes a long way in alleviating any fears of reliability when buying a car. These days, manufacturers and dealers are also offering extended warranties at reasonable prices, securing your car for up to seven years in some cases.
- Not so much an advantage, but more of a feel-good factor, one can’t argue with the new car feeling. Picking up your new car from the showroom is an experience, and even though it doesn’t add anything to the value of the car, it does make the whole journey that much more special.
- Buying a new car means you get the latest technology and safety features, especially if you opt for higher variants. With manufacturers competing to pack their cars with the most features and tech it is nearly impossible to buy a new car today and not get a lot of features, including safety features like airbags, ABS and ESC.
Explore the advantages of buying a used car below:
- Most cars produced in the last 5 years have standard safety features like airbags, ABS, and reverse parking sensors which are the primary things a consumer needs in their car. When it comes to the interiors these cars have a decent music system with USB, Bluetooth, and AUX connectivity. If you’re lucky you might also find a used car with additional accessories such as an amplifier, subwoofers, leather seats, reverse camera, and a touch-screen infotainment system. Why spend more when you can avail the features of a new car in good condition pre-owned car?
- Choosing a used car offers significant savings on insurance premiums compared to new cars with higher values. As a car ages, its depreciated value results in lower insurance costs. Insurance companies consider the market value when determining coverage expenses. Opting for a used car can lead to substantial long-term savings, making it ideal for budget-conscious individuals. Note that insurance costs may vary, so comparing quotes is recommended to secure the best rate based on the car's make, model, and driving history.
- Used cars are undoubtedly the best choice for someone learning to drive or still new to driving. A few scratches or dents are quite common when you begin to start driving and it is wise to buy a new car once you’re confident enough to take on the bustling city roads.
Disadvantages of Buying a New Car Vs Used Car
Explore the drawbacks of buying a new car versus in the table below.
- The depreciation of a new car priced around $ 18,000 will be anywhere between 15-20 percent the moment you drive the car out of the dealership. The percentage of depreciation or the rate of depreciation for a used car is much lower than for a new car because the depreciation rate slows as the car ages. With manufacturers launching new cars, face-lifts, and limited editions every few months, consumers are constantly upgrading to newer cars and selling their old cars within a year of purchase.
- New cars can be two or three times as expensive to insure as a used car. The cost of insurance reduces as the car ages, so even a one-year-old used car will cost less to insure than a new car. And when buying a used car, chances are the insurance is still valid, another cost that does not have to be borne by you.
The biggest disadvantage of buying a new car is how much more expensive they are, compared to even one or two-year-old cars. The insurance, the road tax, it all adds up. No matter what type of car you are buying and its cost, a new car always works out to be more expensive than a used car.
Explore the drawbacks of buying a used car in the table below.
- Older cars may require more frequent repairs and maintenance, which can add up over time and become expensive. Further, used cars do not have first few years of maintenance and warranty included.
- Older cars may not be as environmentally friendly as newer cars, with less efficient powertrains and emissions control technologies. However, one needs to consider the environmental impact of producing a new car from scratch as well.
Difference Between the Depreciation of a New Car Vs a Used Car
In simple terms, the depreciation of your car refers to the decrease in its value over time. New cars and used cars both depreciate, but the rate of depreciation can be different. Without further ado, let’s take a look at some of the key differences between the depreciation of a new car and a used car:
- New cars generally depreciate faster in the first few years of ownership. This is because a new car loses the most value in the first year of ownership.
- The rate of depreciation of a new car slows down after the first few years, but the car will continue to lose value over time.
- Used cars generally depreciate at a slower rate than new cars. This is because the initial depreciation has already occurred, and the car has already lost the most value.
- The rate of depreciation can vary depending on the age, make, model, and condition of the car. A used car in good condition is less likely to depreciate as fast as a used car that is not well-maintained.
In other words, new cars tend to depreciate faster in the first few years of ownership than used cars. This rate of depreciation slows down after the first few years, but the car will continue to lose value over time.
Car Loans: New Car Vs Used Car
Car loans operate as instalment loans, providing borrowers with a lump sum to be repaid with interest over time. These loans are typically secured by the car itself, carrying the risk of repossession if terms aren't met. Lenders, such as banks and online providers, offer car loans, with dealership financing as an additional option.
Upon approval, borrowers make monthly repayments, often with a down payment, commonly set at 20%. A larger down payment can result in more favourable interest rates. When comparing new car loans to used car loans, it's essential to note the nuances. New car loans are generally pricier but offer lower interest rates, presenting an advantage for those seeking the latest features and technologies. On the other hand, used cars are more affordable but may incur higher interest rates due to valuation challenges. Credit history significantly influences loan terms, with higher credit scores leading to better rates.
Checking credit scores is imperative for understanding financial health and securing favourable loan terms. This information empowers individuals to make informed decisions about whether a new or used car loan aligns better with their financial goals and preferences.
How to Decide Between an Old and a New Car
Choosing between an older or newer vehicle can be tricky as both come with a set of advantages and disadvantages. But, to help make things a little easier, here are some key considerations to keep in mind when making this decision:
1. Cost
New cars may have a higher upfront cost but offer lower maintenance expenses and a reliable warranty. In contrast, older cars are initially cheaper but often demand more frequent repairs and maintenance.
2. Reliability
New cars are often more dependable compared to their older counterparts. Mostly, because they use the latest technology which allows them to function at a better bandwidth.
3. Features
New cars are often equipped with the latest features and technology, such as touchscreens, navigation systems, and advanced infotainment systems. While older cars may not have these features, they may still have the basic amenities that are important to you.
4. Safety
While older cars may not have certain features, a lot of new cars come equipped with the latest safety features, such as automatic emergency braking, extra airbags, and blind spot monitoring.
5. Fuel Efficiency
New cars are generally more fuel-efficient than older vehicles and are intended to be more environmentally friendly.
6. Depreciation
New cars tend to depreciate faster than older cars, meaning they lose value more quickly. So, if you’re planning to buy a car and sell it in the future, it’s important to be aware of the depreciation associated with the model and brand of your car.
7. Environmental Impact
New cars are often designed to be more environmentally friendly, with features such as hybrid or electric powertrains, which help reduce your carbon footprint to a great extent.
The individual needs and preferences of different individuals, safety, affordability, reliability, fuel efficiency, depreciation, and environmental impact are some factors that dictate your decision to choose between an older or newer car. In addition, it is always considered wise for you to seek professional help and let the experts help you make an informed decision.
Conclusion
At the end of the day, you have to decide which car is best for you. Both new cars and used cars have their pros and cons, and as long as you find a car that you like, it should not matter whether it is new or used.
One of the biggest disadvantages of buying a used car was the unorganised used car market, with dealers trying to sell unsuspecting buyers a lemon. However, we at CARS24 offer a 6-month warranty and 7-day returns, making buying a used car as reliable as a new one.
CARS24 has a variety of used cars to choose from in every budget, whether it’s your first car or an upgrade, there’s something for everyone. Check-out the listings at CARS24.
FAQs
1. Is it better to buy a used car or a new car?
Many people shy away from buying used cars and want their first vehicle to be brand new. However, buying an old car is cost-efficient and needs less maintenance. On the other hand, a new car comes with updated technology, better safety features, and is less damaging to the environment.
2. Can you negotiate the price of a new car?
Newer cars are often made available to people at a base price which tends to go up depending on the various specifications of the same model and the additional accessories. It also depends on the showroom or dealership. If you’re looking for heavy negotiations, it is advisable to consider buying a used car which offers more wiggle room when it comes to the prices.
3. Which is easier to buy, a new car or a second-hand car?
Whether you’re planning to buy a new car or a used one, the right sources would make the process easier for you. While the dealerships give you more customisation options for your new car, individual sellers have relatively limited options to choose from. A new car comes with advanced features and a better warranty, old cars are often easier on your pocket.
Buying a car in Australia has become more common, thanks to increased income and accessible car loan options. However, the decision-making process involves considerations like new vs used, car type (hatchback, SUV, sedan), and the reliability of second-hand cars. In the past, finding a reliable used car was challenging and time-consuming through local dealers or classifieds.
Now, the landscape is evolving with the growth of the organised pre-owned car industry. We, at CARS24, offer certified used cars with a 7-day return, 100% money-back guarantee and a comprehensive 3-month warranty. This shift in mindset is driven by the assurance of finding a used car in excellent condition, similar to a new one. The demand for certified pre-owned cars is rising, with a significant advantage being the potential savings of thousands in the initial investment compared to buying new.
Used Car Vs New Car: Which is the Right Option for You?
Choosing between a used car and a new car is a subjective decision, and the right option depends on your personal preferences and financial circumstances. Ultimately, you should select the one that best suits your needs. Some key factors that could be considered:
- Affordability and Savings:
Affordability often guides the decision, with used cars offering potential savings. The money saved can be utilised for customisation, savings, or future maintenance costs.
- Condition and Age of the Vehicle:
Consider the condition and age of the used car, with well-maintained options readily available due to frequent vehicle changes. You can find relatively new used cars with low mileage at a significant discount compared to new ones.
- Availability and Frequency of Model Changes:
The frequency of people changing cars has increased, making it easier to find good used cars in the market. You may find nearly new cars with minimal mileage, providing a cost-effective alternative to new vehicles.
- Features, Safety, and Reliability:
Regardless of being new or used, prioritise features, safety, and reliability when making your decision. Ensure that the chosen car meets your requirements and serves its purpose well.
Advantages of Buying a New Car Vs Used Car
Explore the advantages of buying a new car below.
- Perhaps the biggest advantage of buying a new car vs a used car is the manufacturer’s warranty. It goes a long way in alleviating any fears of reliability when buying a car. These days, manufacturers and dealers are also offering extended warranties at reasonable prices, securing your car for up to seven years in some cases.
- Not so much an advantage, but more of a feel-good factor, one can’t argue with the new car feeling. Picking up your new car from the showroom is an experience, and even though it doesn’t add anything to the value of the car, it does make the whole journey that much more special.
- Buying a new car means you get the latest technology and safety features, especially if you opt for higher variants. With manufacturers competing to pack their cars with the most features and tech it is nearly impossible to buy a new car today and not get a lot of features, including safety features like airbags, ABS and ESC.
Explore the advantages of buying a used car below:
- Most cars produced in the last 5 years have standard safety features like airbags, ABS, and reverse parking sensors which are the primary things a consumer needs in their car. When it comes to the interiors these cars have a decent music system with USB, Bluetooth, and AUX connectivity. If you’re lucky you might also find a used car with additional accessories such as an amplifier, subwoofers, leather seats, reverse camera, and a touch-screen infotainment system. Why spend more when you can avail the features of a new car in good condition pre-owned car?
- Choosing a used car offers significant savings on insurance premiums compared to new cars with higher values. As a car ages, its depreciated value results in lower insurance costs. Insurance companies consider the market value when determining coverage expenses. Opting for a used car can lead to substantial long-term savings, making it ideal for budget-conscious individuals. Note that insurance costs may vary, so comparing quotes is recommended to secure the best rate based on the car's make, model, and driving history.
- Used cars are undoubtedly the best choice for someone learning to drive or still new to driving. A few scratches or dents are quite common when you begin to start driving and it is wise to buy a new car once you’re confident enough to take on the bustling city roads.
Disadvantages of Buying a New Car Vs Used Car
Explore the drawbacks of buying a new car versus in the table below.
- The depreciation of a new car priced around $ 18,000 will be anywhere between 15-20 percent the moment you drive the car out of the dealership. The percentage of depreciation or the rate of depreciation for a used car is much lower than for a new car because the depreciation rate slows as the car ages. With manufacturers launching new cars, face-lifts, and limited editions every few months, consumers are constantly upgrading to newer cars and selling their old cars within a year of purchase.
- New cars can be two or three times as expensive to insure as a used car. The cost of insurance reduces as the car ages, so even a one-year-old used car will cost less to insure than a new car. And when buying a used car, chances are the insurance is still valid, another cost that does not have to be borne by you.
The biggest disadvantage of buying a new car is how much more expensive they are, compared to even one or two-year-old cars. The insurance, the road tax, it all adds up. No matter what type of car you are buying and its cost, a new car always works out to be more expensive than a used car.
Explore the drawbacks of buying a used car in the table below.
- Older cars may require more frequent repairs and maintenance, which can add up over time and become expensive. Further, used cars do not have first few years of maintenance and warranty included.
- Older cars may not be as environmentally friendly as newer cars, with less efficient powertrains and emissions control technologies. However, one needs to consider the environmental impact of producing a new car from scratch as well.
Difference Between the Depreciation of a New Car Vs a Used Car
In simple terms, the depreciation of your car refers to the decrease in its value over time. New cars and used cars both depreciate, but the rate of depreciation can be different. Without further ado, let’s take a look at some of the key differences between the depreciation of a new car and a used car:
- New cars generally depreciate faster in the first few years of ownership. This is because a new car loses the most value in the first year of ownership.
- The rate of depreciation of a new car slows down after the first few years, but the car will continue to lose value over time.
- Used cars generally depreciate at a slower rate than new cars. This is because the initial depreciation has already occurred, and the car has already lost the most value.
- The rate of depreciation can vary depending on the age, make, model, and condition of the car. A used car in good condition is less likely to depreciate as fast as a used car that is not well-maintained.
In other words, new cars tend to depreciate faster in the first few years of ownership than used cars. This rate of depreciation slows down after the first few years, but the car will continue to lose value over time.
Car Loans: New Car Vs Used Car
Car loans operate as instalment loans, providing borrowers with a lump sum to be repaid with interest over time. These loans are typically secured by the car itself, carrying the risk of repossession if terms aren't met. Lenders, such as banks and online providers, offer car loans, with dealership financing as an additional option.
Upon approval, borrowers make monthly repayments, often with a down payment, commonly set at 20%. A larger down payment can result in more favourable interest rates. When comparing new car loans to used car loans, it's essential to note the nuances. New car loans are generally pricier but offer lower interest rates, presenting an advantage for those seeking the latest features and technologies. On the other hand, used cars are more affordable but may incur higher interest rates due to valuation challenges. Credit history significantly influences loan terms, with higher credit scores leading to better rates.
Checking credit scores is imperative for understanding financial health and securing favourable loan terms. This information empowers individuals to make informed decisions about whether a new or used car loan aligns better with their financial goals and preferences.
How to Decide Between an Old and a New Car
Choosing between an older or newer vehicle can be tricky as both come with a set of advantages and disadvantages. But, to help make things a little easier, here are some key considerations to keep in mind when making this decision:
1. Cost
New cars may have a higher upfront cost but offer lower maintenance expenses and a reliable warranty. In contrast, older cars are initially cheaper but often demand more frequent repairs and maintenance.
2. Reliability
New cars are often more dependable compared to their older counterparts. Mostly, because they use the latest technology which allows them to function at a better bandwidth.
3. Features
New cars are often equipped with the latest features and technology, such as touchscreens, navigation systems, and advanced infotainment systems. While older cars may not have these features, they may still have the basic amenities that are important to you.
4. Safety
While older cars may not have certain features, a lot of new cars come equipped with the latest safety features, such as automatic emergency braking, extra airbags, and blind spot monitoring.
5. Fuel Efficiency
New cars are generally more fuel-efficient than older vehicles and are intended to be more environmentally friendly.
6. Depreciation
New cars tend to depreciate faster than older cars, meaning they lose value more quickly. So, if you’re planning to buy a car and sell it in the future, it’s important to be aware of the depreciation associated with the model and brand of your car.
7. Environmental Impact
New cars are often designed to be more environmentally friendly, with features such as hybrid or electric powertrains, which help reduce your carbon footprint to a great extent.
The individual needs and preferences of different individuals, safety, affordability, reliability, fuel efficiency, depreciation, and environmental impact are some factors that dictate your decision to choose between an older or newer car. In addition, it is always considered wise for you to seek professional help and let the experts help you make an informed decision.
Conclusion
At the end of the day, you have to decide which car is best for you. Both new cars and used cars have their pros and cons, and as long as you find a car that you like, it should not matter whether it is new or used.
One of the biggest disadvantages of buying a used car was the unorganised used car market, with dealers trying to sell unsuspecting buyers a lemon. However, we at CARS24 offer a 6-month warranty and 7-day returns, making buying a used car as reliable as a new one.
CARS24 has a variety of used cars to choose from in every budget, whether it’s your first car or an upgrade, there’s something for everyone. Check-out the listings at CARS24.
FAQs
1. Is it better to buy a used car or a new car?
Many people shy away from buying used cars and want their first vehicle to be brand new. However, buying an old car is cost-efficient and needs less maintenance. On the other hand, a new car comes with updated technology, better safety features, and is less damaging to the environment.
2. Can you negotiate the price of a new car?
Newer cars are often made available to people at a base price which tends to go up depending on the various specifications of the same model and the additional accessories. It also depends on the showroom or dealership. If you’re looking for heavy negotiations, it is advisable to consider buying a used car which offers more wiggle room when it comes to the prices.
3. Which is easier to buy, a new car or a second-hand car?
Whether you’re planning to buy a new car or a used one, the right sources would make the process easier for you. While the dealerships give you more customisation options for your new car, individual sellers have relatively limited options to choose from. A new car comes with advanced features and a better warranty, old cars are often easier on your pocket.
