Should you buy a New Car or a Second Hand Vehicle?

One of the most important decisions you’ll make when purchasing a car is deciding whether you are going to pick up a brand new car or instead opt for a second hand vehicle. There are lots of pros and cons for each.

Pros and Cons of New Cars

The upside of a new car is the obvious: it’s new. That means that you’re less likely to encounter unexpected problems with the car, but also if you do have anything go wrong, it will likely be covered by warranty. A new car also gives you the opportunity to upgrade to the latest and greatest technology: smartphone syncing, smart locks, increased gas mileage and all sorts of other bells and whistles. This also includes safety features, which is an important and often overlooked product feature.

The downside of new cars is the price – you pay a premium to be the first driver of a new vehicle and it’s difficult to buy a new car anywhere but from the dealership – which takes its own markup. However, it’s important to look at the full picture. Sometimes the running costs of a new car, especially gas costs and servicing, are lower than older cars.  Newer cars, especially higher end luxury vehicles, have expensive maintenance, but trips to the mechanic are far more infrequent and more planned than with second hand vehicles. If you’re worried about being able to afford a new car, keep in mind that most banks give better loan terms to buyers purchasing new cars, since there’s more value in them if you default on your loan. One way to assess the amount of money you can save on a car purchase and associated taxes is to use the Platinum Direct novated lease calculator.

Pros and Cons of Second Hand Cars

The upside of a second hand car is that the upfront cost is much less. If you’ve got research skills and a good negotiator, you can end up owning a used vehicle and pay a fraction of the cost of what it was priced new. For example, if you by a car from the owner, you’ll avoid the markups and few fees.

The downsides of second hand cars are the increasing motoring costs over time – maintenance and fuel – as well as the potential unknowns of the vehicle. This is why it is harder to get financing for second hand cars; if you will need a loan to get the car, you’ll want to check with your bank before getting too far along in your research.

If you watch much TV, most used car are portrayed as total bombs that will leave you stranded alongside the road on a regular basis. That’s not the case – you can find many second hand cars that are good value and very reliable.

How to Choose

Every situation is different, but a couple of key criteria to help you consider the options:

  • If you value reliability over price, you should probably get a new car.
  • If you are able to do thorough research and on a tight budget, you should probably consider a second hand car.
  • If you use your car infrequently, you should consider a second hand car.

4 comments to Should you buy a New Car or a Second Hand Vehicle?

  • I got a new car almost 6 years ago. Don’t know what I would do, when it came the time to get another one (which shouldn’t happen sooner than 4-5 years). Maybe I’ll get a good second car (meaning small mileage and excellent condition). having my car new helped us a lot, it is reliable and can be used for many years with no ‘surprises’. It was costly though ..

  • ERIC MANNING

    I NEVER buy new.
    Most of the downside of buying a used car can be avoided if you buy one which is low mileage and just one or two years old. It’ll still be in warranty and has most of the new gadgets.
    Cars depreciate VERY quickly with use – the resale price drops like a stone in the first year of a car’s life. Take advantage of this fact.
    As Rob says, do your homework – look at the Consumer Reports reliability numbers, which will allow you to avoid the lemons, the low-quality
    makes and models.
    And, before you buy, take the car of your choice to an independent mechanic for a thorough checkup. Some PetroCan stations offer
    this service; for about $100 they will check the car thoroughly and give you a detailed written report.
    Finally, some models are MUCH cheaper in the US and can be imported easily if you prepare the paperwork in advance – the website
    Registrar of Imported Vehicles [Google RIV] tells you exactly how to do this. I saved about $8000 on a Honda S2000 by buying American.

  • Mike

    Before you splurge on a brand new vehicle, take a look at the projected value of the car in one year’s time. (AutoTrader offers such information).

    Last year, when I was looking to purchase a Hyundai Elantra of Ford Focus I found that the on-road cost (inclusing taxes and preparation) of each was around the same – close to $25000. The one year projected value of each was less than $15k. In other words I was virtually guaranteed to loose $10k in the first year. Instead I chose to buy a somewhat overpriced 2006 Mazda 3 GT sport in pristine condition with low mileage for $10000 – the cost of one year’s depreciation on a new vehicle. One year on the car has cost me nothing but routine maintenance. The potential depreciation cost of the new car has paid for my Mazda.

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