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New or used: What's the right car for you?

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Australia is an automotive nation. Home of the Holden, friends of the Ford, territory of the Toyota: we love our vehicles, but do we know how to buy them? Check out our quick guide to buying a new car versus a used one.


Buying a new car has become more popular in recent months1, and for good reason: Businesses that purchase a new car can claim the depreciation come tax time, while regular consumers may simply want to work with something that is more reliable, more modern and has more advanced features. For some vehicles, the improvements in fuel efficiency and safety could well be worth the premium you pay for a newer model.

However, you have to remember that a new car will rapidly depreciate in value - by up to 20 percent in the first year by some estimates2. Some makes and models hold their value more readily, but unless you manage to buy a future collector's item (and keep it in good condition), you may find that your vehicle is worth a lot less in just a year's time.


This, on the other hand, is one of the reasons why used cars are that much more affordable than new ones. Used cars aren't always 20-year-old clunkers: they can be almost factory-fresh and still have lost a significant chunk of their price tag. Savvy used-car buyers could aim for these more modern used vehicles, as they will often still have their manufacturer's guarantee: useful documentation to have for a vehicle that could already be unreliable due to previous mismanagement.

However, not every used car you find is going to be this close to new, and may not be covered under the manufacturer's warranty. Despite this, you are still eligible for a statutory warranty if you buy a used car from a dealership, as long as it meets certain age and mileage requirements. This affords you protection even for a used vehicle, but make sure to check your state's laws regarding this to ensure you know what you are getting yourself into.

Whether you are buying new or used, it is important to ensure that you are spending your car loan wisely. If a deal seems too good to be true, then it could very well be, and buying from a private seller doesn't grant you the protections that buying from a dealership does - hence why it is often cheaper.


Always do your research, shop around between multiple dealers if possible and make sure you know the pros and cons of each make, model, age and mileage. Avoid the lemons and make the most of your car loan capital.

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Australian Bureau of Statistics, Sales of New Motor Vehicles, Australia, April 2016 

2 Choice, Car depreciation

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