Buying a New or Used Car – What Make Good Financial Sense
Posted: Jan 26, 2020
You feel excited from the moment you decide you want to replace your old hatchback. Isn’t it! Buying a car is a big purchase that demands thoughtful consideration. However, selecting a vehicle is purely a personal choice - some people may prefer Ford while others may like Jaguar.
Regardless of your preference, there is one question that you need to take under serious consideration and that is - Would you like to buy a brand new or used car? Well, there are pros and cons of both, so you need to take into consideration all aspects before arriving at a final decision. In this blog post, we’ll go through the major benefits and drawbacks of purchasing a new and used car, which will help make your decision easier.
Benefits of Buying a New Car
1. First Owner
You become the first owner when you buy a brand new car, which is the best thing as you won’t have to go through service history or worry about any of the mechanical, electrical or hydraulic components of the vehicle. The maker delivers the car straight to the dealership showroom and you drive it out from there straight on to the road in pristine condition. From the moment you take delivery of the car, it becomes your responsibility to care for and maintain the vehicle. Moreover, your new car comes with a guarantee, so you don’t have to worry if something goes wrong as it will be taken care of.
2. New Motor Vehicle Plans & Warranty Coverage
Typically, brand new cars warranty ranges from 3 years to 7 years depending on the maker. Similarly, depending on the maker brand, a warranty may range from 100,000 kilometres to unlimited kilometres within the warranty coverage period.
- Toyota provides 3 years/100,000 kilometres warranty.
- Ford provides 5 years/unlimited kilometres warranty.
- Kia provides 7 years/unlimited kilometres warranty.
Motor plans are very helpful as they facilitate you to service your car at regular intervals. Moreover, if you plan to go on a vacation trip in your new car then you won’t have to pay any extra money to get your car serviced before the trip as you’re already covered by your new car service plan.
3. The Excitement of Possessing Brand New Vehicle
When you purchase a brand new car - exterior and interiors, everything is brand new! You would like the smell of the brand new vehicle interiors, as well as, the comfort and feel it provides. The joy of driving a new car is awesome and it takes months to wear out the wow factor.
Drawbacks of Buying a New Car
Buying a brand new car is a pricey affair. The price of parts, labour and advanced technological know-how (to make your ride safer) is always increasing, so the manufacturing cost is also on the rise and may continue to rise in the future as well.
The moment you drive your car out of the dealer’s showroom and onto the road, your car’s sticker price drops between 15% and 30%. Ensure you have gap insurance in place to cover any shortfall in insurance values.
Insuring newer car models is expensive and can cost much more than insuring older car models. Before signing up with any company, check with insurers first. To keep pace with the depreciation of your vehicle, ask your insurer to revise your premium every year. Also, look out for insurance providers that award no-claim bonuses to responsible drivers.
Benefits of Buying a Used Car
1. Easy on the Pocket
The main benefit of buying a used car is its lowly sticker price! You’ll be able to buy a used car at a price that is less than 40% to 80% than the sticker price of the same vehicle when it left the showroom floor as brand new. Imagine if you’re able to grab a used car in good condition at a sticker price that is less than 60% or 70% of its original price, then it’s a very good deal.
2. You Won’t Lose Much of Your Money When Selling a Used Car
Similarly, when you want to sell off the used car, you’ll take a much lower percentage hit than someone that’s the first owner of the car – and that’s because new cars depreciate a lot. If owners hold onto their new cars for more than four years then depreciation can eat away their vehicle’s value swiftly.
3. Insurance Costs
Usually, your insurance costs will be much lower for an older model vehicle compared to buying a new car.
Drawbacks of Buying a Used Car
1. Previous Owner
Despite the service records that are maintained and produced, you don’t have any idea how the previous owner drove the vehicle. What if there are no properly maintained service records to look at, then it would get a lot tougher to decide.
2. Repairing & Servicing Cost
If the tyres need changing or brakes and clutch require replacing or want to get it serviced, then you’ll have to pay it out of your pocket, as it may not be covered under vehicle warranty or service plan.
If you’re financing to buy the used car, then be ready to pay more in interest, which will be over the sticker price.
The Bottom Line
Purchasing a brand new or used car comes down to personal preferences that include key aspects such as price, vehicle service plans, warranty coverage, vehicle’s depreciation, insurance and finance. With proper research, you can grab a used car in good condition at an affordable price that can be much lower to the new car sticker price.
If you’re interested in Ford cars, then you can either visit the website or showroom of Ford dealers in Sydney to know the current offers they have on new Ford car for sale, as well as, on demo and used Ford car for sale.
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