New to used

Whether you are looking at buying a new or used car, it’s important to consider all the associated costs.

There’s a lot to consider when it comes to choosing whether you want a new or used car – image, gadgets, safety, fuel efficiency – the list goes on. But when you focus on it from a purely financial perspective, Damien Bury asset finance associate says, ‘the financial impact stretches beyond the initial purchase price to the running costs and the residual value when it comes time to sell or trade in’.

Purchase price

New cars: You generally pay more for a new car. Only you can decide whether it’s worth paying more in order to choose exactly what you want.

If your new car is over $65,000, you’ll pay 33 per cent luxury car tax. If you choose to go green with a diesel, hybrid or electric car, you may receive both financial and environmental benefits with the luxury car tax only applying to ‘green’ vehicles over $75,000.

Used cars: Purchasing a used car may leave a smaller hole in your bank account initially but it may be harder to find exactly what you want. It is possible to retrofit some of the mod cons to a used car, but more often than not it becomes less important once people find out the price.

‘If you’re buying through a dealer who’s offering add-ons, read the fine print carefully so you can really weigh up whether it is genuinely adding value,’ Damien says.

Warranty and servicing

New cars: Most new cars come with a factory warranty and some offer capped-price servicing. This can make budgeting for your servicing costs much easier. It also removes a lot of uncertainty and provides peace of mind that if something does go wrong it’s not going to cause a disastrous financial fallout.

Used cars: While some dealers offer a warranty on their used cars, it’s usually basic cover.

‘Either way, when you take your car in for a service, you don’t know whether it is going to cost $300 or $3000. That can make budgeting difficult,’ Damien says.

Depreciation

New cars: Everyone knows new cars generally lose value as soon as they’re driven out of the dealership. Both luxury and mid-priced cars retain about 50 per cent of their original value after five years.

‘Do your research on the lifecycle of the model you are looking at. Most manufacturers release a new model every five to six years. When that happens, the previous model may drop 20 per cent of its value almost immediately,’ Damien says.

Used cars: Used cars obviously still depreciate but you’re generally buying the vehicle after the big drop in value. This creates opportunities in the used car market. A one to two year old car that still has its manufacturer’s warranty hasn’t lost its appeal but may have lost some of its original price.

Finance

Before you look into new or used, there’s still one important factor to consider – will you buy or lease the car. Finance arrangements vary for new and used vehicles so it’s important to speak to an expert.

Call the finance specialists at HIA Vehicles today on 1300 650 776 to discover the best options to suit your lifestyle.

 

Vehicle and asset finance, sourcing and other services are provided by Macquarie Leasing Pty Ltd ABN 38 002 674 982 (Australian Credit Licence 394925) (Macquarie Leasing). HIA Vehicles is a registered trading name and business name of Housing Industry Association Limited ACN 004 631 752, and Macquarie Leasing is licensed to use such name and other trademarks.

Any information or advice contained in this article is general in nature, is not an expression of opinion or recommendation, and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information or advice in this article, you should consider the appropriateness of it (and any relevant product) having regard to your circumstances and, if a current offer document is available, read the offer document before acquiring products named in this article. You should also seek independent financial, accounting and tax advice prior to acquiring a financial product.

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