A car is one of the biggest purchases you’ll likely ever make. And a key question you’ll need to answer before you go car shopping is whether your want to buy a new or used car.
There are advantages and disadvantages for both types of cars; the answer will ultimately depend on what kind of vehicle you want and how much you’re willing to pay for it.
The benefits
A new car typically comes with a range of extras such as a full warranty and capped price servicing. You have peace of mind that the car has no history and therefore no existing problems to spring up out of the blue. And even if your new car is faulty and something does go wrong, with a full warranty and capped price servicing you’re unlikely to be too much out of pocket, if at all, to get it fixed.
The main benefit of buying a used car is the amount of money you’ll likely save at purchase time. You’re taking a bit of a gamble on its history, but provided it has a good service history and you get a mechanic to check it out beforehand, you can be pretty confident in your purchase.
The (possible) negatives
New cars can be expensive and depreciate in value very quickly – as soon as you drive out of the dealership, it will be worth less than what you paid.
No matter how new the used car you’re interested in is, there’s no guarantee it’s going to run well. Any savings you make at the time of purchase may be wiped out by costs further down the line. Buying a used car at an auction can be risky, since for example you may not be able to take it for a test drive before you buy.
Other considerations
At some point you may want to sell your car and recoup some of your money. A new car will depreciate a lot faster than a used car, but no matter which way you go it’s likely that you’re going to sell your car for less than you bought it for.
Check out car trading websites to get an idea of how the car you’re interested in will hold its value. Though you’ll probably lose money, picking a car that will re-sell well could save you some money in the long term.
Paying for your car
If you’re looking for a loan to help you buy your car, you have a few options with CommBank. You can take out a Fixed Rate Personal Loan, a Variable Rate Personal Loan or a Secured Personal Loan.
A Secured Personal Loan is available for new cars as well as used cars that are up to seven years old. This is an important consideration when looking at used cars because using your car as security can typically reduce the amount of interest you pay on your loan.
Find out more about the difference between each loan.
A novated lease is a way you can finance a new or used car and make your repayments from your pre-tax salary with approval from your employer. It can also bundle your vehicle’s expenses into one simple payment. Novated leasing is a form of ‘salary sacrificing’, which effectively reduces your taxable income.
