A tricky question you may face when buying your first car, or replacing your current one, is whether to buy new car or a second-hand one.  

The biggest draw for used-car buyers is affordability, and there are a variety of options from which to choose in the affordable price range.

Buying a new car does have a lot going for it, but the downside is that new cars lose much their value in their first year alone. 

A car, whether new or second-hand, should never be regarded as an investment. However, because it is probably the second-biggest financial commitment you will undertake, after buying a home, you should take your time and scour the market for the right car, on the right terms, for you. A good rule of thumb is that if you cannot afford to pay off a car in three years, or five years at most, you probably can’t afford it. 

The Automobile Association (AA) says that, with more and more consumers buying used vehicles, it is important for consumers to minimise the risks of ending up with a bad buy.

“Before launching your search for a good deal on a used car, spend some time considering many of the same factors that would apply to a new-car purchase: how you will use the vehicle; how long you plan to keep it; the size, style, features and appearance you need or prefer; and your budget or financing options. Know your financial limits, and secure any needed financing before beginning your search,” the AA says. 

After-purchase costs, such as fuel, insurance and maintenance, also need to be borne in mind. 

In terms of the Consumer Protection Act, a used car dealer must declare any known defect of a used car to a potential buyer.


ADVICE ON BUYING A USED CAR

AutoAdvise has some practical steps on how to purchase a good second-hand car:

• Make an appointment to view the car. Take someone with you who knows about things mechanical if you do not.

• First inspect the bodywork. Walk slowly around the car, starting and ending at the same point. Look carefully at each body panel. Look for signs of repairs and overspray. Open all the doors, the boot and the bonnet. Always examine the bodywork in good light, and do not inspect the car in the rain or if it is wet.

• Check inside the car. Look at the general condition of the carpets and the upholstery. Test everything, including the electric windows, mirrors, sound system and seat mechanisms. If you are a non-smoker, check the ashtray for signs of cigarette ash. If you are a non-smoker, the smell of stale smoke might irritate for as long as you own the car.

• Check the service book. Compare the actual mileage to the last service. Do the dates check out? If you are a little suspicious, check that the same ink has not been used for all the services.

• Don’t appear to be over-eager to buy.

• Once you are happy and are certain that you want to buy the car, write down the price you would like to pay. Also, write down the highest price you are willing to pay. It’s a good idea to discuss this with your partner  or a friend before making an offer.


NEW vs USED: PROS AND CONS

Buying New

The advantages:

• You have peace of mind, because new cars come with a full warranty, guaranteeing you against certain faults for a certain period; 

• You know the history of the car and its condition; and

• Banks tend to offer better interest rates for new cars, because new cars have lower risk. 

The disadvantages:

• It is estimated that, once a new car leaves the showroom, it typically loses 15% of its value, and about 10% of its value each year thereafter. 

• Dealerships and finance institutions require you to have full insurance cover on the vehicle until it’s paid off, and the premiums are likely to be high on a new vehicle.

Buying second-hand

The advantages: 

• Someone else has paid the depreciation for you.

• You can buy the best car for the price you can afford. It is not unusual to find a late-model used car at less than half the cost of a new one. 

• Some deals on recent-model used cars offer the remaining balance of the factory warranty, and the opportunity to purchase an extended warranty.

The disadvantages:

• One of the biggest disadvantages of buying a used car, particularly an older model, is that it may not be reliable, or it may need a lot of repairs. 

• You’re likely to pay a higher interest rate on a used car.

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