When it comes to purchasing a car, most people will automatically think that buying a brand new car will give you much more bang for your buck. Others will argue that due to depreciation, that may not be entirely true. On the other hand, buying used cars presents its own set of risks to the buyer. Regardless of your choice, the important thing is to practice due diligence to ensure that you are not being ripped off.
When buying a new car
There’s really nothing like getting the keys to your brand new car, unlocking the door, slipping into the driver’s seat, smelling the fresh leather, and hearing the engine purr as you turn it on.
However, the downside of buying a new car occurs just after you drive it out of the showroom. As soon as you do, you would have already lost as much as 25% of your investment.
As if adding insult to injury, CHOICE estimates that a new car loses about 14% of its value in each of the first three years of its life.
From a purely visceral and emotional standpoint, nothing beats being the first owner of a shiny magnificent car. However, if you are one to focus on the cost, and the value of your investment, maybe buying a used car is the more appropriate course of action.
When buying a used car
Used cars are obviously a much cheaper alternative than brand new cars, however there are trade-offs involved, the most immediate would be involve the hesitation and stress on the side of the buyers.
On average, car buyers will spend around $14,000 for a used car. While not being a large amount especially when compared to that of buying a new car, it’s not something that most buyers are comfortable paying.
This is because there is an underlying mistrust placed on the seller of the car as well as the car’s history. When you really think about it, this trepidation isn’t really unfounded. In a recent study, it was revealed that 22.2% of vehicle history checks in 2015 turned up a negative report. The most common negative report on used cars is having an encumbrance; meaning money was still owed on the car. The second most common negative report is the car has been previously written off.
It is estimated that 1.2 million Australians will be purchasing a used car in the next 12 months, but unfortunately not a lot of them will go beyond doing basic research. Only 28% of buyers will do a cursory mechanical inspection on the vehicle before buying, and less than half of them will look into the car’s history.
Most don’t know that it’s actually very easy and relatively cheap sidestep these potholes. They simply need to check the car’s history by going to https://www.ppsr.gov.au/ or http://www.carhistory.com.au for a comprehensive report. Other than this, performing a detailed inspection of the vehicle can tell you all you need to know about whether or not the car will present you with problems down the line.
Whether you’re shopping for a brand new or used car, doing your homework and coming in prepared will go a long way in securing you with the car and at a price you’re comfortable with. If you need help in paying for the car, going with a reputable car finance company can help you.