Guidance

Should you buy a new or used car?

Should you buy a new or used car?

Whichever type of car you buy, there are pros and cons for both you need to know about.

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 Car Loan.

A Secured Car Loan is available for new cars as well as used cars that are less than five years old. This is an important consideration when looking at used cars because using your car as security can significantly reduce the amount of interest you pay on your loan.

Find out more about the difference between each loan.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Commonwealth Bank of Australia ABN 48 123 123 124.