Buying a car is a major purchase for most people. Should you buy a new, or a used car?
A new car will come with a warranty and service plan – and there will be no existing problems that may surprise you. If something does go wrong – your warranty will cover repair/replacement of the faulty part. The downside of a new car purchase is depreciation of the value of the vehicle. The value of your car reduces the moment that you drive it out of the showroom. The average new car in Australia loses 15% per year in the first 3 years – that’s a whopping 40% in the first 3 years. Thereafter, the rate of depreciation slows to around 10% per annum – assuming that you don’t drive more than 15000 km per year. Think about it this way – if you spend $100 000 of a new car, in 3 years it will be worth only $ 60 000.
A used car will be a lot cheaper than the price of a new model, and if the car is more than a year old, the biggest hit from depreciation will already have been made. Mileage is a big issue when it comes to depreciation of a vehicle – low-mileage vehicles will tend to look and feel better, and be more reliable. If you want to minimise the loss of value of your vehicle due to depreciation, buy a car that is more than a year old and one that has a low mileage relative to the age of the vehicle.
There may be existing problems with the vehicle – but if you do your due diligence thoroughly, checking out the service history and getting the vehicle checked by a mechanic – you can do a lot to mitigate this risk. You can also look for a brand that has a long, comprehensive warranty, and select a used car that is still within the warranty period.
Buying a used car at auction may be more risky as you may not be able to test drive the vehicle, or get it inspected before you buy.
One option to look for when buying a used car, is to buy a car that is being sold off a novated lease. A novated lease is an option whereby a brand new car is run and maintained by its purchaser, and then sold privately at the end of a three-year ownership period. Novated lease cars are usually maintained and serviced as part of their contracts, and when the lease period ends the new owner should have the option to extend the factory warranty – providing some of the peace of mind associated with purchasing a new car.
Contact Carbiz today to secure your new car. Let us take the hassle out of buying or selling your car – Carbiz, a better way to buy and sell your car.