Should You Buy A New Or Used Car?

Buying a car is one of the biggest decisions of your life. Besides purchasing a house, you have to weigh up all the pros and cons, the expense and if it is suitable long-term for your needs. You may have a vehicle in mind already or be looking for something particular that can accommodate your family, commute or lifestyle. 

But then you need to ask yourself if you want all the mod cons and safety features of a new car or save yourself some cash with a used car. From affordability to speed of purchase, there’s a lot to consider. So, should you buy a new or used vehicle? Let’s find out:

Make a budget and stick to it

The number one rule of buying any car, regardless of its age, is making a budget and sticking to it! Simply highlight all of your monthly expenditures, such as rent/mortgage, utilities, ongoing direct debits and living expenses. 

If you haven’t got any savings to speak of or have little money left over each month, what can you let go of? Can you cut down your food shop or go somewhere cheaper? Can you reduce your phone bill? 

Once you’ve worked out your current budget, how much of your earnings/savings can you put towards a car? Then you need to think about insurance, road tax (if any), maintenance/servicing, fuel, breakdown cover and running costs. As soon as you know what you can afford, you can start to get serious about your purchase. 

You’d be surprised how easy finding a car for under 10K really is, so don’t worry if you don’t have a large lump sum to splash on your car. You can even find cars for under 5K if you’re happy to have a smaller, older vehicle. 

You may think that buying a second-hand car would mean spending less money, but you could actually get a new car on finance for a much smaller monthly fee. This, of course, adds up over time, and will eventually be more than the cost of a used car; however, it’s a more manageable payment plan that lots of people prefer rather than having to pay in full upfront. Make sure you check your interest rates and any rules or limitations before you sign up for a payment plan.

New vs used

Car financing is the most popular currency for purchasing cars in the UK, regardless of their age. While some types of finance will only let you buy new cars, there are some personal loans available that will help you snap up the best second hand vehicles around. 

But what are the pros and cons of buying a new or used car? Well, let’s see:

New cars make the world go round

Straight off the forecourt and jam-packed with the latest technology and safety features money can buy, there’s little wonder why so many people opt for a new car. But while there are many positives, there are also some drawbacks to be aware of too:

Pros:

• No history to worry about
• Lowest mileage available
• Life-saving safety technology and features
• Better fuel efficiency
• Lower emissions and taxes, if any, should you opt for an Electric Vehicle
• Blank canvas – you choose everything from the gearbox to trim and colour
• Covered by warranties and service usually included

Cons:

• Depreciation hit – your car loses its resale value as soon as you drive it away from the forecourt. Typically, new ars lose 50% of their original value within the first three years
• Your circumstances could affect your monthly repayments

Used cars have done their time, plus some

According to the BBC, second hand car sales have more than doubled in the last few months due to model shortages. From a bigger pool of options to choose from to the lasting impacts of the pandemic, owning a used car is not to be scorned at. 

Pros:

• You can buy from a dealer or private seller, but first, it’s important to understand how dealers price cars, so click here to find out more.
• No depreciation to worry about if the car is older than three years, as the previous owners will have taken the financial hit
• Most dealers will offer a warranty 
• Fewer upfront costs

Cons:

• Used cars have a history of other drivers attached
• You’ll have to cover most if not all of the repairs 
• Less security through private sellers.
• You might have to pay to ship the car to your home

How can you pay for your car?

Gone are the days where you flick through the classifieds and find yourself a bargain from an unknown private seller. Instead, you have a world of choice at your fingertips via everyone from the dealership to online ads to consider. But while you may have a budget in mind, there’s the actual paying part to work out. 

Today, one of the most affordable ways to buy your next motor is through car financing. With most online lenders approving applications on the day, you could be driving away in your fresh set of wheels in minutes. The catch? Knowing which motor to go for!

While dealership finance offers may look appealing, you are entitled to shop around before heading to the showroom. The most common ways to finance your car are:

• Cash: the only no strings attached method of financing is the one that few of us can reasonably afford
• Personal loan: banks, lenders and more offer unsecured loans up to £25,000. The biggest perk here is that most private sellers will accept this as payment as well as dealers
• Hire purchase: secured against the vehicle itself, you simply put down a deposit (usually 10%) and pay off the rest of your balance with fixed monthly instalments. With this type of loan, you won’t own the car outright until you’ve made a “balloon” payment and accepted the “option to buy.” Biggest perk: manufacturer’s warranty and servicing typically included
• Personal Contract Plan: this type of loan allows you to put down a deposit (usually 10%) followed by small monthly repayments. Unlike hire purchase, you pay the difference between the original selling price and the vehicle’s predicted resale value at the end of your term. Perks: you can give the car back to the seller, no strings attached, accept the “option to buy”, or use it as part payment towards another vehicle at the end of your contract
• Personal lease: any worries of depreciation are taken care of with this type of loan. But, you can expect a more significant deposit (usually 25% that you won’t get back!), alongside your fixed monthly repayments. What’s more, the car will never be yours outright. You have to give it back at the end of your lease and may face extra charges if you go above your agreed mileage allowance

What’s more, if you have a shaky credit history, are self-employed or have experienced financial difficulty in the past, there are a wave of reputable poor credit car finance lenders out there to help you get back on the finance ladder. 

There are many perks to new and used cars that are worth shouting about, but which has made the final cut for you?