New car or used car?

used car

When you are in the market to upgrade your car, it is hard to know whether to go for a brand new car or a used car. Below we outline why it is probably a good idea to go with a used vehicle over a new one.


New cars lose their value when you drive them off the lot. Why? Because they’re not shiny and new anymore. This means that if you drive a car past the sidewalk and try to sell it to someone walking down the street, you cannot get the purchase price you paid. By purchasing a used car that has fully depreciated, the value of your car is fairly fixed. If you need to sell your car, you may be able to recoup what you spent.

Initial Investment

Due to the aforementioned depreciation, the amount of money you have to pay for a used car is not significant. You can often find a car in running condition with heat/air conditioning that has been reasonably maintained for $10,000 or less.

If you want a newer car, a lot of dealers have the previous years plated model at thousands of dollars less than a new car. It is still under warranty and low km’s but is only a year old.


Many people shy away from older cars as the fear of high km’s leads them to worry about significant repairs. On the other hand, older cars may offer a do-it-yourself approach for the mechanically inclined. For example, repairs on an older car may just require a trip to the auto parts store and a bit of grease on our hands. Even for more luxurious vehicles, like a used BMW, repairs can be more manageable with the availability of original BMW parts online or in specialty stores.  In contrast, if anything breaks on a newer car it’s at the very least a trip to the dealership, and a very expensive trip if it’s out of warranty.


Auto insurance is not just based on your driving record, it’s based on the cost to replace the car you drive. By driving a cheaper car you may find that after you consider your premium, it doesn’t even make sense to have comprehensive or collision coverage, third party insurance may be sufficient. Your insurance agent could help you save a significant amount every month by running the numbers.

Since a cheap used car can be the financially smart choice, how should you find a cheap car now?

Like any other purchase, decide what your needs are, and eliminate any vehicles that don’t, regardless of how good a deal it may be. Look for cars that have a good service history, possibly one owner, a reputable reputation for “lasting forever” and are within your budget.

Choose a reputable car dealer, such as John Hughes, who has been a reputable dealer in Western Australia for many years. If you choose a reputable dealer, you are less likely to have issues with buying a ‘lemon’.

Always get a second hand car checked out by the auto society in your state ie RACV, NRMA, RACQ or a reputable mechanic. A $150 investment in making sure the vehicle is in good working order could save you a lot of money down the track.

 Have you ever purchased a used vehicle?  What advice would you give someone in the market for a used car?

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