New or used cars: What's your best option?
Last updated: 15 May 2024 | Estimated read time: 5 Minutes
When deciding to purchase a car, you will need to decide whether you are looking at a new or used vehicle. Doing your research can help you work out which car meets your needs in the long run.
When it comes to buying a car, it’s easy to get excited at the thought of owning the latest model with new features and stunning leather seats. However, if you considering an older model then a used car might work for you. Here are some tips to help you decide.
Buying a new car
It has to be said, there’s nothing quite like the feeling of owning a brand new car – not to mention the new car smell.
With a new vehicle, you can choose a model with the latest features, obtain a new car manufacturer warranty that typically lasts between three and five years and, depending on the dealer, you could benefit from capped-price servicing.
You also get to choose which optional features you want on your vehicle, such as the trim, colour, wheel upgrades and more. In short, you can get the features you want, and the new car warranty can also provide you peace of mind.
New cars also tend to break down less than used cars, and if serviced according to the manufacturer's requirements, they could remain mechanically sound for the first few years with very few problems.
The downside is that most brand new cars can quickly lose a significant percentage of their value due to depreciation within the first few years of ownership. Depreciation rates can vary depending on the make and model of the vehicle.
Buying a used car
As long as a vehicle has been well looked after and regularly serviced, you might also consider getting a car loan to buy a used car.
If the car is only a couple of years old, it might still have a valid new car manufacturer warranty and also access to capped-priced servicing.
A downside of buying a used car is that you’ll have to take the car as is. There are usually many used cars available for sale in the market, so take the time to look and you’re likely to find one that meets most of your needs.
You can choose to purchase a used car from a licenced car dealer, through private sale or via an auction.
Buying a car from a private seller
You may get a good deal buying through a private seller but other than making sure you are giving the car a thorough check, it's also important to get the vehicle assessed by a professional mechanical inspector. Private sellers are usually more eager to sell their vehicles as soon as possible and are typically more flexible on price during negotiation, however buying privately requires relying on your own judgement.
Apart from the benefit on price, there are a few things you need to be wary of when buying a car privately. Here are some pre-purchase checks you should do:
Check that the seller is the registered owner of the car
Make sure the car you are considering, is the one covered by the registration papers
Check the registration is valid
Do a PPSR check
Make sure that the car you are looking at doesn't have a third party registered security interest by doing a Personal Property Securities Register (PPSR) check. If the seller has done a PPSR check beforehand and is able to provide a certificate of the search, you can use the search number on it to retrieve the original search results.
If you are satisfied after your checks and are confident in purchasing the vehicle for the offered price, make sure you also obtain a written receipt to validate your purchase.
Buying a car from a dealership
Buying a car through licensed dealers may be more expensive than from a private seller but it can offer you greater protection.
Car dealers must only sell cars that have no money owing. All cars sold from a licensed dealer should include a car description form which has important information such as the dealer’s name, cash price of the car, VIN and engine number, mileage and warranty details where applicable.
You should check that the information on the form reflects the actual details of the dealer and car, just as you would with a private seller’s certificate of registration. It’s also a good idea to do an inspection on the car before you buy, especially if it doesn’t come with a warranty.
Here's what you can get when you purchase a car from a licensed dealer:
- You'll receive a statutory warranty that guarantees the car is mechanically sound, and that most mechanical problems will be resolved within a certain period of time. Depending on the state you live in, the warranty and its conditions will vary, but largely depends how old the car is, its existing mileage and selling price.
- Dealerships can provide specialist advice about the right kind of car to suit your needs and budget.
- The dealership handles all the paperwork, including transfer of ownership to checking its registration, saving you a considerable amount of time.
- The dealership may be able to assist you with financing and insurance options.
- You could possibly trade in your old car with the new one.
- You are entitled to a cooling off period should you change your mind. Note that there is no cooling off period for new vehicles. Cooling off period varies depending on the state you live in. Check with your licensed car dealership before signing on a contract.
Buying a car at Auction
Cars purchased at auction are not covered by a dealer guarantee and normally you can’t take it for a test drive. You should arrange an independent vehicle inspection prior to the day of auction.
Need a new car? We're here to help.
Many factors can influence your buying decision, and while each make and model can appeal differently, knowing what you need the most is key in helping you decide whether to buy brand new or go second-hand.
Our job is to make it easy to get your hands on the wheel of your new choice of car. So, we've made it simple with our range of flexible car loan options. We provide both secured and unsecured car loans.
Contributor | Andrew Gamble, Head of Sales - Asset Finance
Andrew brings more than 20 years of experience in the finance industry. His strategic vision, leadership and his customer centric approach has contributed to the significant growth of Pepper Money's Asset Finance business. Read more.
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