Buying a new car vs used: pros and cons

A car is a major purchase, and if you are considering buying one, you might be asking yourself, should I buy a new or a used car? The truth is, there are advantages and disadvantages for both options.  

Check out our list of pros and cons to help you make your big decision. 

Pros of buying a new car 

There are plenty of benefits of buying a new car, from having more car options to that irresistible new car smell. Here are a few perks of buying a car that’s brand new: 

Peace of mind with a new car warranty 

No doubt buying a new car comes with a good dose of peace of mind. A new car is generally more reliable and less likely to break down or need repairs. And if anything does go wrong, your new car warranty (usually three to five years) will have you covered. 

Most new cars come with a certain amount of warranty based either on total kilometres or for at least three to five years.  

If you plan on selling the car within the warranty period, it usually passes on to the new owner, which can help you sell your car faster.  

You're free to choose exactly what car you want 

One of the biggest benefits of buying a new car is the freedom to choose exactly what you want. Everything from the make and model to the choice of colour and specification level is up to you (so long as it fits your budget).  

Choose from the latest available features too 

New cars also come with the latest developments in safety features and fuel efficiency, making them safer to drive and cheaper to run. 

A new car will be fitted with the make and model's most up-to-date technological features, so if driving with all the latest gadgets is important to you, there is no going past a new vehicle. 

You also get to customise the car to your exact liking, including which accessories and extras you'd like to add. 

More likely to have lower running costs 

Coming straight from the factory, there will be no history or hidden problems, or previous owners having made their mark on the vehicle. 

Despite popular belief, insurance on a new car can sometimes be cheaper than on a used car, thanks to those latest safety features. It's worth checking the price difference with your insurer so you can factor this into your financial costs and decision-making. 

Cheaper car finance rate  

For car loan lenders, it's easier to determine the value of a new car compared to a used car. As a result, there are often stronger finance deals for new cars. To get a better idea of what loans can offer, check out our range of new car loans and see which one best suits your needs. 

If you're looking to get a car loan to help in buying your next car, make sure you consider the total cost of the monthly payments under different rates, as it could affect which one ends up as the cheaper option over time.  

Cons of buying a new car 

By now, you might be thinking, why on earth wouldn't I buy a new car? Before you get too excited, check out the cons below. 

Depreciation impacts 

Aside from the expensive upfront cost, new cars depreciate in value the moment you drive them out of the dealership, with some estimates at a whopping 20 per cent. After the first few years, the value of your car could drop by half or even two-thirds. 

If money is tight or you're trying to save, the disadvantages of depreciation alone could be enough of a reason to buy a used car instead, depending on how long you're planning to keep it. 

If you like to upgrade your vehicle every few years or so, buying a used car just a few years old could save you a load of money. However, if you're planning on keeping your car for a long time, you're more likely to get value for your money by purchasing a new car. 

Potentially higher maintenance costs once the warranty expires 

Once your warranty runs out, your new car and all its latest parts and technological features could cost more to repair than an older used car. 

Availability of stock could mean a longer wait time to drive away 

If you're buying a new car, you might have to wait weeks or even months until you're sitting behind the driver's seat. 

If it has to be ordered from the factory and delivered from overseas, shipping times can delay the arrival of your highly anticipated purchase. 

For some buyers, this simply isn't an option, especially if their current vehicle has broken down and they need to get back on the road quickly. 

Pros of buying a used car 

Buying a second-hand car is also a good alternative, especially for those who are looking for something more cost-effective. Here’s a quick overview of the benefits of buying a used car: 

Used cars are a much cheaper option 

As a more affordable option, buying a used car could save you thousands and thousands of dollars. If you've done your research and found a car with low kilometres (about 15,000km to 20,000km a year is a good guide), that's had all of its services, that test-drives well, and that's passed an independent vehicle inspection, you could be onto a winner. 

Avoid the majority of the depreciation costs 

One of the biggest downsides of buying a new car is the impact of depreciation as soon as you drive it off the lot. 

When buying a used car, most of that depreciation will have already occurred.  By buying used and avoiding depreciation, you could also afford to buy a recent prestige model with all the added extras and features (think leather seats, sunroof, reverse camera, etc.) for the same price as a new basic model. 

Better for the environment 

You can also give yourself a pat on the back for helping the environment by buying a used car instead of a new car. Although new cars often use less fuel, the amount of pollution generated during the manufacturing process is usually only offset by the better fuel economy if the car is used for longer. 

If everyone upgraded their car every couple of years, it wouldn't be doing the environment any favours. 

Cons of buying a used car 

Of course, there are also some downsides to buying a used vehicle. Before you start car shopping, here are a few disadvantages of purchasing a second-hand car: 

Likely to have higher ongoing costs 

Buying a used car comes with the risk that it might break down or need repairs, sometimes within a few months of purchase. 

It's also more likely to spend more time at the workshop, so if you can't afford to be without it for a few days here and there throughout the year, buying new might be a better option. 

Services are more likely to show up repairs that need to be made on used cars as the kilometres start to rise, so be prepared for the costs. Insurance could also be more expensive on your used car, so be sure to compare prices and factor these into your costs. 

You may not be able to get a complete service history 

Another disadvantage of buying a used car is finding flaws or faults you might've missed before you purchased it. 

While you can often get a vehicle history report for a used car, if one isn't available, there's a risk you're buying a car with unknown defects.  

Windows that don't operate correctly, seats that get stuck when you try to move them back and forth, sun visors that droop, air-conditioning vents that don't hold position, compartments that don't open or close properly, stains and scratches you missed – the list could be endless when buying a used car.   

Fewer options are available for buyers 

Unlike new cars, where dealerships can offer a wide range of makes, models, and specifications, there are likely to be fewer options on the used car market. With limitations on supply, buyers may have to compromise on certain factors like colour or different available features. 

Buying a New Car vs Buying a Used Car 

Here’s a quick overview of the perks and pitfalls of buying a new car versus a used one: 

What's right for your circumstances? 

Whether buying a new car or a second-hand car, the important thing to remember is that everyone is different. What is right for someone else and suits their circumstances might not be right for you.  

We all make decisions based on different grounds, so don't worry if you're making a different choice to well-meaning family members, friends or the local mechanic offering advice. At the end of the day, the right decision is the one that is right for you. 

Whichever option you choose, it’s always important to find the best finance solution. If you’re looking to buy a car with finance, loans.com.au has a range of new car loans and used car loans with competitive rates and money-saving loan features.  

Speak with one of our car loan specialists today to find out what would suit you best. Or you can start your loan application online! 

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