Which option saves you the most money? Buying a brand new car that doesn’t have any costly repairs, or buying a used car with a lower monthly payment? This is a pretty common debate among those who want to upgrade their vehicle but also want the smartest investment. It is also a very complex debate to solve since so many aspects, like depreciation, running expenses, insurance, financing, and resale value, can all affect the final outcome or the total losses you have over the years.
Car-buying advocates are constantly monitoring vehicle markets, and they already know what the best possible money-saving option is. Here is a quick breakdown of how buying new compares to buying used in terms of money saved.
- Depreciation – The Biggest Cost Difference
All vehicles lose their value over time, but a new car will lose a lot more value over the first few months compared to a used car.
Brand new vehicles tend to lose 15 – 25% of their value within the first year. Their value can also decline by up to 50% within the first three years.
On the other hand, used vehicles have already experienced that steep depreciation margin, and they are now losing value much more gradually. As a result, you don’t lose nearly as much of your initial investment when it is time to resell.
Money Saving Tip – Melbourne car buying advocates often recommend buying a quality used car of around 3 – 5 years old. These offer the best value without the sharp depreciation rate.
- Warranty and Repairs
The next big concern is warranty and repairs. New vehicles usually come with a 3 – 7 year factory warranty. Some manufacturers are now offerring up to 10 year warranties if the cars are always serviced at their Dealerships.This shields buyers from unexpected repair bills.
Used cars are often already outside of their warranty. This means that there is a much higher chance of out-of-pocket repair costs. You can, however, buy from dealers that offer statutory warranties. This type of warranty is mandatory for used cars/vehicles under 10 years or 160,000 kilometres and covers some of the out-of-pocket repair costs on vehicles. Usually they are covered by a 3 month or 5000kms which ever comes first.
Money Saving Tip – Car advocates in Melbourne believe that a used car is still the better money-saving option, especially if you invest in a quality vehicle with low kilometres and a statutory warranty.
- Insurance and Registration
Insurance companies tend to have higher premiums for new vehicles. This is because a newer vehicle will cost a lot more to replace. In Australia, stamp duties, dealer delivery fees and registration costs can also be a little bit higher for a brand-new vehicle.
Money Saving Tip – If you want to save a lot of money on insurance, then it can be better to choose a quality used vehicle.
- Fuel Efficiency and Running Costs
The newest vehicles are designed with the latest technology, which means they usually offer better safety features, lower running costs, and better fuel efficiency. A used car isn’t going to be as fuel-efficient, but relatively new vehicles tend to balance out this difference, especially considering their lower monthly payment.
Money Saving Tip – New and low-mileage modern vehicles are equal in terms of money savings when it comes to fuel efficiency or running expenses.
- Resale Value
Your new car will experience a lot more depreciation when it is time to resell. A used car around the age of 3 to 7 years won’t drop in value as much, which means the loss during selling is a lot lower. It is also true that buyers often make some profit by buying used vehicles at rock bottom prices and reselling them at a slightly higher rate. This is something you can never accomplish with a brand-new vehicle.
Money Saving Tip – If you intend to resell in the near future, buying used is always the best option.
Save Money WIth Help from Car Buying Advocates in Melbourne
From this comparison, it becomes clear that buying a used car that is still in good condition is going to save you a lot more money compared to buying brand new. If your goal is to minimise your long-term costs, then it is best to invest in a vehicle for around 3 to 5 years.
At My Next Car Buying Advocacy, we can help you find the perfect vehicle. Our car buying advocates have numerous local connections and can connect you with a quality used car at an affordable price. With our help, you can find a dreamy vehicle you love to drive and achieve the best possible financial outcome.
Contact My Next Car Buying Advocacy now and save money on your next vehicle upgrade.
