When it comes time for you to buy a car, you will be faced with the classic car buyer’s conundrum – Will I buy a new or used car? Each one comes with its own pros and cons in terms of critical financial factors such as value, reliability, and warranty.
It’s a well-known fact that the value of a new car shrinks by a significant amount as soon as you drive it out of the dealership. This depreciation will continue to impact your car’s value for the first few years. This loss is dependant on manufacturer and model reputation. Cars with good reputations will tend to depreciate less.
This is part and parcel of new car ownership. Some buyers will happily live with this to be safe in the knowledge that they are the first owner avoiding any issues caused by previous owners.
Obviously, this is where used cars have a big advantage. Most used cars are normally at the end of their depreciation curve, meaning the second owner won’t be suffering the value losses like the first.
For example, a person who waited 3 years to buy the car another person bought from new will benefit from paying what amounts to only 60-70% of its initial value. This means buyers have the potential of picking up a large bargain if they are willing to wait and buy used.
A new car will likely prove to be more reliable due to the fact that the parts have not been subject to any wear and tear yet. New car owners can also be assured that the operation of critical parts of the vehicle haven’t been compromised by any bad driving or maintenance habits of previous owners. New cars often have proven mechanical components in them, which promotes longevity.
This can be a gamble, especially as most used buyers don’t have money to be sparing on excessive repairs and maintenance. As mentioned before, certain owners might not have taken the proper actions to promote reliability, such as maintaining key servicing intervals. On the other hand, some owners like to ensure their car has been serviced religiously. A car’s servicing history is a fantastic indicator of future reliability and should be taken into consideration.
Some cars also have a history of questionable reliability from the factory, and buyers should do extensive research into which models to avoid losing large amounts of money on unexpected repairs. An expert inspection on any car you’re seriously considering is a must to put your mind at ease about your prospective purchase.
A manufacturer’s warranty is a big part of the appeal of purchasing a new car. It gives the buyer peace of mind that they will be covered for any problems related to the construction and engineering of the car. The industry standard for warranties is currently 3yrs/100,000km, but some can last for as long as 7 years with unlimited kilometres.
Most used cars won’t come with a warranty, however, there are always exceptions to the rule. As previously mentioned, some cars have up to 7 years’ warranty. This means that it is very much possible that you can pick up a car with some residual warranty from the first owners, provided that all servicing schedules are adhered to.
Some used dealers also have warranty programs available through either the dealer themselves, or through a third party at an additional cost. Some of these warranties are very limited in what they will cover and are subject to conditions, such as servicing the car at a particular dealer. It’s worth reading what the warranty covers before deciding if it’s worth paying for.
NEW OR USED – WHICH IS BEST?
Ultimately, purchasing either a new or used car comes with its own strengths and weaknesses. Buying new assures you that the car will be covered if there are any problems with it during the initial ownership period, but comes with the tradeoff of increased pricing and depreciation.
Buying used gives the buyer far better value for their money, but without the assurances of knowing exactly what kind of life it lived prior to you, or a warranty in certain circumstances.
Above all else, you should weigh up the pros and cons of buying a new or used car, do proper research into what you’re after, and buy what the best option is within your means.
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