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Is It Better To Buy A New Or Used Car?

Rachel Horan

Rachel Horan

May 13, 20213 minute read
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When you’re thinking about buying a car, one of the decisions you will need to make is whether to get a new or a used car. While the appeal of a brand new car is understandable, a used car can be a great deal as well. Ultimately, each option comes with its own pros and cons to consider.

Below, we’ve put together a handy guide on what to take into account when choosing between buying a new or used car.

Buying a new car

A clear advantage of buying a brand new car is that no one has used your car before. As it’s new, you know exactly how it has been driven and if it has any pre-existing problems. Generally, a new car comes with no miles, except if it has been driven outside of the showroom, so it will have a longer running life.

In addition, brand new cars come with a full warranty and may include capped price servicing or even a free first-service. This means that if there is a problem with the car within this warranty period, it can be fully covered by the manufacturer. You also have the option to choose additional features such as tinted windows, colour, car seats, wheels, floor mats, roof racks, car protectors, or vision technology.

Possible cons

The main downfall to buying a new car is its high cost and the similarly high depreciation. As soon as your brand new car leaves the dealership, the value depreciates. A car’s value can drop as much as 40% within the first three years. The longer you own the vehicle, the less it depreciates over time. It depreciates most in its first few years, so brand new cars essentially incur the most loss of value.

This is something to keep in mind as you may wish to sell your car at some point in the future. With the high depreciation rate of a brand new car, you are likely to recoup less of your initial purchase amount when you sell it.

Buying a used car

Buying a used car does not mean buying an old car. There are many used cars on the market that are only a few years old, so it’s possible to get the same features of a brand new car at a lower price.

For instance, if you were to purchase a car that is a year old, it likely doesn’t have a large amount of kilometres clocked. It may also still have its original warranty (with most cars having warranties up to five years). A used car could have lost up to 30% of its original value, but still has great features and is a fraction of the price of the same car, brand new.

Possible cons

The key issue with purchasing a used car is that you can never guarantee its running history. While it may have been consistently serviced and have no visible defects, you can never know exactly what may have happened to it. However, there are ways to mitigate this risk, including having a car appraisal done prior to purchase. In this way, a professional can assess the car to ensure that it is in good condition.

Generally, cars that are between 12 and 18 months old are considered to be in the ‘sweet spot’ of used vehicles. However, cars that are older may still be in great condition. Regardless, conducting a car appraisal can provide you with an added peace of mind.

So, which one is the better option?

As you can see, both options come with their own benefits and drawbacks. Financially speaking, purchasing a new car is ideal if you can afford the cost and high depreciation. On the other hand, a used car is likely going to be more cost-effective.

Below, we’ve listed some of the pros and cons of each option to help you decide which one is right for you:

Pros Cons
Brand new car
  • Never used before
  • Comes with warranty
  • Customisation choices
  • Generally expensive
  • Depreciation
  • Worth less if you sell
Used car
  • Generally cheaper
  • Sometimes still has warranty
  • Depreciates less
  • Used by someone else before
  • Can never know running history

Whether you choose to purchase a new car or used car, it is still one of the most important financial decisions you’ll make in life. Before you make a decision, consider the features that are important to you, including the car’s size, fuel efficiency, and safety features.

You might also want to consider your finance options and whether you wish to use a car loan to fund your purchase or purchase your vehicle outright.


Copyright © www.jacarandafinance.com.au Jacaranda Finance Pty Ltd ® ABN 53 162 078 195 Australian Credit Licence 456 404, Pawnbroking License Number 4221738. The information on this web-page is general information and does not take into account your objectives, financial situation or needs. Information provided on this website is general in nature and does not constitute financial advice.


Rachel Horan
Rachel Horan

Written by Rachel Horan

Rachel Horan is a Content Writer for Jacaranda Finance. Rachel has previously produced content for Brisbane City Council, Black & White Cabs, and Clubs Queensland. She has a Bachelor of Mass Communication with Distinction from the Queensland University of Technology.

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