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New vs used car? That’s the question many ask when deciding to buy a car. New cars cost more upfront, they depreciate in value quicker and the interest you pay on a loan can certainly hurt your back pocket. However, buying used can often be a false economy due to higher maintenance costs, fewer tax benefits and lower reliability.
Don’t worry, there is a sweet spot. We’ve put them in the boxing ring for the ultimate new vs used car battle.

Below you’ll find the pros and cons so you can decipher what makes sense for you.

THE FACE-OFF

Reliability
New: New cars are obviously more reliable as they have brand new parts that are meant to last for years. All new cars also come with some kind of warranty, some as long as five years, giving you peace of mind for the term of the warranty that, if anything does happen, you’re covered.	Used: A used car is less reliable. How much so will depend on the age and maintenance history of the car? An up-to-date logbook showing a good service history and/or a car that is still within warranty will alleviate a lot of the risk.
Depreciation
New: New cars depreciate the most in the first couple of years, so you wear the bulk of it when buying new. However, if you are able to claim depreciation through business-related expenses, or if you plan to keep the car for a long time, this becomes less of an issue.	Used: A car depreciates in value less each year so the older the car you buy, the less you will lose on depreciation. Buy a 10-year-old car and sell it two years later, provided it’s well maintained, won’t lose much in its value. Any savings in depreciation, however, need to be weighed against any potential increases in the maintenance costs of buying an older car. And if you are able to claim depreciation through tax, you will receive a much smaller benefit.
Fuel
New: Car and fuel technology, as well as government regulations and a push for fewer fuel emissions, means that cars are becoming more fuel-efficient over time. Fuel-saving diesel cars and hybrids are also becoming increasingly available. So, as a rule, new cars tend to be more fuel efficient.	Used: The older the car the bigger a gas guzzler it tends to be. Even a car that is three to five years old is unlikely to have the fuel-saving technology available today.
Maintenance costs
New: New cars typically come with a warranty against any faults and mostly require only minor servicing. So, in theory, you should have relatively low maintenance costs for at least the first three years of your car’s life.	Used: The older the car gets, the more you’re likely to spend on maintenance. Even in the most well-maintained cars, things will go wrong and major will need to be replaced. Look out especially for cars about to reach the 100,000km mark that hasn’t yet had a major service. For most cars, this is when the big-ticket service bill comes in. And of course, you don’t know what problems you’re buying from the previous owner. Their driving conditions will play a huge role in the ongoing maintenance costs you’ve now inherited.
Insurance
New: New cars typically cost less to insure as they’re fitted with more safety features to prevent accidents, and are less likely to be stolen due to technology that makes them harder to break into and start.	Used: Conversely, older cars typically cost more to insure as they’re more likely to be stolen and contain fewer safety features.
Features
New: If you want the fancy new features you’ll get more of what you’re looking for in a new car. Whether it’s for luxury and enjoyment or safety, you’ll get to add all the bells and whistles.	Used: You’ll have to rely on what’s available in the market in terms of what features might be available on what car. You’re less likely to get the exact specifications you’re after and, of course, some of the newer technology may not yet be available in the age of car you’re looking at.

What’s Right For You?

There’s more to buying a car than just the numbers. You also have the emotional side of buying, the new car smell and the feeling that comes with driving out of a showroom and around town in your new wheels. You’ll have to quantify the value of that yourself. To help you look at the hard numbers, though, below is an example below on one of Australia’s most popular cars to demonstrate the real cost difference between new and used. You’ll probably be surprised by the marginal difference…

TOYOTA COROLLA Ascent (automatic)	New	Used
Vehicle age	0 years	3 years
Purchase price	$24,440	$12,900
Deposit	$2,000	$2,000
Finance interest rate	8.50%	8.50%
Loan term	5 years	5 years
Annual KMs	15,000	15,000
Fuel consumption rating	6.1 (L/100km)	7.4 (L/100km)
Monthly finance cost	$460	$224
Monthly registration cost	$36	$36
Monthly insurance cost	$90	$104
Monthly petrol cost	$97	$118
Monthly maintenance cost (over 5 years)	$95	$134
Monthly repair cost (over 5 years)	$3	$21
TOTAL MONTHLY COST	$781	$637

It’s important to note that each car will be slightly different, so be prepared to do a little Googling to get all of the information you need.

THE SWEET SPOT

We’ve helped hundreds of people buy their cars, and although everyone’s circumstances are different, we’ve worked out that for most people there is a sweet spot.

This is where you get to drive the newest car possible at the lowest possible price: a car that looks new has many of the new car features and fuel efficiency but costs less than the showroom price.

So, what’s the sweet spot? Typically a two-year-old car, prior to the end of the warranty period. The largest amount of the depreciation is gone, it still looks and feels new, will have many of the new-car features available today, and it’s unlikely to require any major repairs or maintenance. If there are any issues with the car you’re likely to be able to rectify them under warranty.

Ultimately, everyone values different features in their cars but armed with the pro’s, con’s, tools and typical sweet spot you should now be armed to confidently make the new vs used choice for yourself.

For any auto related questions or concerns, Blue Toro is here to help.  Give us a call on 1 300 Blue Toro.