It was once said jokingly, that the scent most likely for any man to find completely irresistible, if it were possible to bottle it, would be that of the inside of a brand new car. Of course buying a brand new car is expensive, and many feel a sensible option is to buy something second hand. There are two different perspectives on this, which are heavily influenced by how long you actually intend keeping the car. Much of the discussion in favour of the second hand market focuses on the depreciation on a new vehicle in its first and second year, which can see 30% gone after a year and 40-50% after two. This is a substantial chunk of cash for sure, but the true cost of owning your vehicle, including insurance, servicing and repair over a number of years, rather than just the first two, can dramatically affect the dynamics.
The New Car Benefits
Aside from the glorious smell, your new car not only has warranty, it is far less likely to experience any repair issues in its early life. You will often find financing deals from main dealers like Phillip Mitsubishi, with interest rates substantially lower than those offered by used vehicle financing companies. Vehicle efficiency is improving all the time, so the latest technology could also save you significant amounts in running costs, while newer cars tend to be significantly safer than older ones. Having no repair bills for three years as seems standard today in the warranty is part of the risk/reward issue, where the used car may end up costing you the same or more.
New Car Disadvantages
The most immediate disadvantage of a new car is of course, the depreciation that occurs the instant you drive off the forecourt. You only actually feel this loss when you sell the car, so the longer you keep it, the less of a hit you take as every year passes by. Including the period of no repairs, keeping the vehicle for five or even ten years can see you saving money over buying second hand every two or three.
When you buy a new model, you do run a small risk also that there could be problems with some aspect of its design or performance, an issue that is less of a concern on a proven vehicle.
Used Car Benefits
Buying a used car is obviously much cheaper then buying a new one. Someone else has taken the first big depreciation costs, so finding the cash to pay for it, or as a deposit is much easier. Given the lower subsequent depreciation, finance rates are likely to be quite reasonable and insurance is also likely to cost less, especially important for the younger drivers.
Used Car Disadvantages
Aside from the purchasing cost, you need to factor in potentially nasty repair and maintenance issues, though given vehicle reliability these days, owning a three year old car for a few years, can see you through with just regular servicing. You have less choice in colour or extras than a new vehicle of course, as most constraints are of cost, vehicle history and mileage.
Finding the right match for your needs can also be more time consuming than ticking the boxes on the new car extras shopping list at the dealership of course.