- Posted 30 Jun
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If you’ve been eyeing a new BMW or a late model Jaguar, you’ve probably wondered whether a new or used luxury car offers the best value. The prestige market is different in some ways to other car markets, yet some things remain the same. Find out more below.
Pros of buying used
Most financial advisors will tell you a used car offers the best deal. After a few years, a vehicle is still in excellent condition but its value has depreciated, offering a substantial discount to purchasers of late model used cars.
For example, a BWM 320i depreciates as much as $12,000 within the first few years. This decrease can make all the difference to a certain class of buyer. A luxury vehicle that would have been out of reach at the higher price now seems like a definite possibility.
Used car cons
But buying a car is not just a one time financial decision. You’ll need to consider the ongoing upkeep and maintenance. For the first few years of a luxury car’s lifespan, things are unlikely to go wrong, and what does go wrong should be covered under the factory warranty.
Maintenance and repairs for European luxury cars can be very high. Parts are more expensive than other models, and finding expert labour adds to the price considerably. Even standard parts like tyres will be much higher than for other markets, because you are paying for high performance gear.
Pros of buying new
Even in the luxury market, you can often find sales, discounted interest rates, and other incentives pushed by manufacturers to boost sales. A few years ago BMW sold their convertibles at prices they guaranteed were “cheaper than second hand” to clear out the previous year’s models.
If you have excellent credit and can qualify for a zero per cent or very low interest rate, you can save thousands of dollars over the life of your car loan. This helps to offset the higher sticker price of a new car, and you’ll benefit from years of hassle free ownership.
New car cons
Not surprisingly, the biggest argument against a new car is the value that you’ll lose through depreciation. But consider another con: a highly customised luxury car can be difficult to sell when you are ready to move on.
If you buy a common car like a Honda Civic, there are millions on the road and odds are there are millions of people who are willing to buy one used. If you purchase a high-end prestige car and then customise it to your exact tastes, you’ll have a tougher time finding someone willing to buy. It’s certainly not impossible, but expect the process to take longer.
After weighing pros and cons, some experts still decide in favour of the new prestige car. They feel the value, advanced features, and years of low maintenance are worth the extra price if you are in the market for a luxury vehicle.
No matter what your next car will be, Australian Credit and Finance can help. Contact our loan specialists to discuss your car loan needs today.