The decision to buy a car is always complex and difficult. Not only is it hard to determine what is the right make and model of vehicle, but you also need to decide whether you want to buy a brand-new car or buy a used car that already has wear and tear and kilometres on the clock. The latter decision is particularly a vital one, as deciding to spend more on a new car would probably mean taking out a larger loan, which could have a significant impact on your finances for many years to come.
Before making your decision, you should weigh up these pros and cons:
Advantages of buying a new car
AAs the first owner of a brand-new vehicle, you have a guarantee that wear and tear have not adversely affected the vehicle and you will be part of the service and maintenance journey from the beginning. It is also likely that the vehicle will come with a warranty, while the dealer may offer financing at a lower interest rate, which could potentially reduce the amount of interest you pay over the lifespan of that loan. Further, the interior and exterior body of a new car will be in better condition, while a new vehicle is likely to include all the latest technology that will make your driving experience that much more pleasurable.
Disadvantages of buying a new car
From the moment you buy a new vehicle and drive it off the dealership floor, it will depreciate in value. What this essentially means is that you will be losing a big part of the initial investment. If you are not planning to drive the vehicle for a number of years, you will not be able to recoup the loss once you decide to sell. It also goes without saying that there will be a larger financial outlay for a new car, while certain models of vehicles produced in certain years can experience problems that could endanger you when driving.
Advantages of buying a used car
The greatest benefit of buying a used car is that you will not take a financial hit on its depreciation. Additionally, in a few years, you might even be able to sell the car for nearly the same amount that you paid for it owing to inflation, while you will still be able to acquire good financing options and may receive more favourable interest terms. You will also not have to outlay as much money initially on purchasing the vehicle and may even be able to save up enough to pay for it in cash.
Disadvantages of buying a used car
The main disadvantage is that you will not know what condition the car is in – it may need extensive repair work and not be reliable enough for your travel needs. The vehicle may also not have the modern features of a new vehicle, including technology and a plush interior. Also, while you will get a good price if you sell the car after a few years, if you wait too long to sell it, you probably won’t be able to sell a very old vehicle for too much cash.
No matter what decision you make, it is essential that your new or used car is protected against all risks, from comprehensive insurance to on the road running costs with Service & Warranty plans. With Drive and Save’s one stop shop solution you can insure your vehicle end to end (T&C’s apply).