Buying a new car can be a really exciting stage of your life – after all it’s something that will give you freedom, allow you to get to work, and even take fun family adventures. After a house, purchasing a car is probably one of the biggest financial investments you’re going to make, sure you want to make sure you’re making the right choice. One of the first decisions you’ll have to make is deciding whether you’re going to buy new or used. Here are some pros and cons of each that you should take into consideration before you make your decision:
1. New Cars are Expensive
New cars are extremely expensive because you’re buying brand new and you’re going to absorb most of the depreciation costs during the first five years of ownership. That means if you were to buy the same model car, only 5 years older, chances are that it would be at least 1/3 of the new price. This is a substantial difference and if you’re not too worried about having the latest model, buying second hand can be a great way to knock a decent chunk of the price of the car off, or to get a car with more features than you could normally afford.
2. New Cars are New
One of the best things about buying a new car, aside from that fresh new car smell, is the fact it’s 100% a blank slate. You know that nobody has crashed the car, that there’s no major structural damage and that everything is working as well as it should. The first few years of car ownership are great, because everything’s new unless you have a crash, there should be very little to do in the way of maintenance. This can mean a huge peace of mind as you don’t have to worry about any major structural issues or car maintenance costs usually for the first few years.
3. Old Cars in Cash
If you buy a used car, the price will be considerably lower, meaning that you could potentially pay for your car in cash or at least have a repayment schedule that is much more affordable. If you are planning to buy your car on finance, my advice is to take a serious look at the cost of the car over the finance term. If you’re purchasing a new car over finance, you can end up paying thousands and thousands of dollars in interest which could be an unnecessary expense. Sometimes it’s better to get a more affordable car, so you spend more time paying the principle rather than the interest.
Buying a new car is exciting, but just be sure you’re making a decision that makes financial sense.