New cars vs Used Cars: Pros and Cons

New cars vs Used Cars: Pros and Cons

motomatch / 21 June 2021

Buying a car for yourself or someone else is an exciting venture. But with the thrill of the hunt and all the research, the animated discussions about which brand and model is best and getting to test drive some options, comes the daunting fact that you have to make a very big decision that’s going to cost you a lot of money no matter which way you slice it. The bottom line is that if you have to spend money, you want peace of mind, knowing that you considered all the facts and made the best decision with the resources available to you.

A common (and really important) question that always comes up is – should I buy a new or used car? It’s a tough one, and ultimately you need to make a choice based on what is best for you and your lifestyle.

We’ve put together a list of the pros and cons for purchasing new or used vehicles.

The pros and cons of buying a new car

A brand-new car is a tempting choice. Not only will you be its very first driver, but you’ll get that special “new car” feeling every time you drive it! Let’s take a look at the pros and cons of buying a new car off the floor.

Pros

  • New cars usually come with manufacturer warranties and service plans
  • You shouldn’t have to spend much on maintenance in the first few years of ownership
  • New vehicles come with all the latest gadgets and safety features
  • Many new vehicles come with modern fuel technology, making them more fuel efficient than their ancestors
  • You will be the very first owner, which may give you peace of mind

Cons

  • They’re new, so they just cost so much more. Brand perception and reputation can add a lot to the cost of a new vehicle
  • There may be limited options in your price range
  • Higher insurance premiums
  • A new car devalues very quickly. Brand new vehicles typically lose up to 20% of their original price the moment they’re driven off the showroom floor. Each year the car will lose a little more of its value. This depends on various factors, but the principle is the same. See the handy table below, based on a car with an original purchase price of R250 000 (note that the depreciation increments change depending on various influences):

YEAR

1

2

3

4

5

Depreciation %

20%

15%

10%

8%

6%

Car value

R200 000

R170 000

R153 000

R140 760

R133 722

The pros and cons of buying a used car

Buying a pre-loved car also comes with its fair share of positives and negatives.

Pros

  • Affordability. Used cars are a lot cheaper for obvious reasons. One of them being that the original owner has absorbed the brunt of the depreciation cycle and you’re now getting it at a decent price without all the year-on-year loss of value
  • Bargains are easy to come by. While it’s really important to watch out for unscrupulous sellers trying to make an extra buck off a pile of junk, there are people out there who are selling pre-loved vehicles at really good prices. This could be for various reasons – perhaps they’re immigrating or looking for something more suitable to their lifestyle; perhaps they just need cash in a hurry! The point is to take your time - there are some second-hand gems out there if you look for them
  • If the car is still relatively young, you can get a small loan if necessary and pay it off quite quickly
  • A wider range to choose from within your budget
  • As technology continues to improve, you’ll be able to fish for more and more modern cars within the used car pool
  • Lower customization costs. You’ll be shopping for a car that already has add-ons you want, so you won’t be paying the exorbitant fees you would usually have to pay a dealer
  • Lower insurance costs. A brand-new car comes with a higher insurance premium, because if you’re in an accident with it, they will pay for what the car is worth at the time – leaving a gap between what you paid for it and what it’s worth. Used cars have already gone through their major depreciation cycle, so premiums are lower

Cons

  • You won’t always have insight into who drove the car before you and how they drove it
  • Unless the car still has some of its warranty in place, you won’t have any guarantees if it breaks down
  • There may be significant maintenance costs for an older vehicle
  • Customization is limited. The cars will come as it is and there will be a limit to how much you can modify it

As you can see, there are considerations for both new and pre-owned vehicles. You’ll need to look at what you really want vs what your budget is and make a decision from there.

All cars loose value some time (news cars faster than used cars), so here are some quick tips on how to mimimise the rate of depreciation on your vehicle:

  • Spend the money keeping the car in great shape – cosmetically and mechanically
  • Keep a record of all services and maintenance
  • Keep the mileage as low as possible
  • Buy a car with a great resale value (think fuel efficiency, make and model, colour, etc). We’ve got a great article on this, you can read it here

Was this article helpful? We hope so! Let us know what your opinion is on new vs used cars