- Posted 16 May
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When it comes to buying or replacing your current vehicle, the decision you have to make is whether you’re going to buy new or used.
The decision isn’t as cut and dry as it would seem, as it does depend on the situation you’re in financially and how long you plan to hold onto the car for.
To help you decide which is your best option, you need to consider a few different things. The questions below will help you determine whether a new car or a used car is your best option.
4 Questions to Ask Before Buying Your Next Car
- Do you have a deposit or trade-in value available?
If you have a good credit rating, you’ll more than likely have fewer issues accessing a new car with little or no deposit compared with buying a used car.Many dealers offer incentives for new car purchases that aren’t available in the used car market. So if you sit in this category, buying new is a good option.However, if you don’t have a great credit rating, the a used car is your better option, provided you have a decent deposit or trade-in value available.
- Can you afford to take the new-car depreciation hit?
Many people forget that a car is a depreciating asset, and that when you purchase a new vehicle, you will face a depreciation hit when you come to sell the car or trade it in.It’s important to note that a new car will lose between 20-30% in value the minute you drive it off the lot. This is why, in most cases, buying a used car is a better option.The only time that buying new might be a better option is for tax purposes, where you need to offset funds. This is normally only relevant to those people who own a business.
- Can you afford to maintain a used car?
New car’s typically come with some form of free maintenance offer for the first few years – used cars do not.You need to determine whether you can afford the upkeep of a used car. You should factor in monthly maintenance fees and regular checks with your mechanic into the overall affordability of a used car.A happy medium is to look at cars that have been certified by the manufacturer, such as demo models, and purchase these, as they normally come with a warranty and some maintenance options.
- Can you lease the car instead?
If you are looking at getting a new vehicle, rather than lose money from the depreciation, consider leasing the car instead.If you work for a large company, you could do this through salary sacrifice and save on tax and also on fuel and maintenance costs. You don’t have to buy new though; you could also look at leasing a used car. It’s an option to consider as you would save on a number of things, not just the overall depreciation loss.
Now that you know the questions you need to consider, make sure that you have finance arranged and an idea on the type of car you’re looking for. Here at Australian Credit and Finance, we can help with both those things, so give us a call today – 1300 735 557.