Financing a used car - Buying a new car vs buying a used car

May 15, 2014, 5:55 pm
Financing a used car  -  Buying a new car vs buying a used car

You're looking to buy a car on finance, but you don't know where to start. You understand that used cars can present better value than new cars, but will you have any difficulties financing a used car? What are the differences between buying a used car and buying a new car? Well, don't worry, to help you make your decision, here are the five main differences between buying a used car and buying a new car.

1. New cars can be ordered to your specification
Of course, with a new car, you can order it to your own specification. Choosing colours, interiors and accessories means a lot to some customers, and they prefer buying new for this reason. But don't let this trick you into spending a lot of money on extra coffee holders and heated seats. Know exactly what you want before you buy, you never know, you might be able to find a used car with the same or a similar specification. When you're buying a used car though, this can take time. If you aren't happy with colours or interiors that aren't perfect, then you need to be prepared to wait. If you're an impatient soul and can afford the down payment and financing, buying a new car might be the better option.

2. Used cars are a lot cheaper
This is an obvious one, but used cars are a lot cheaper than new cars. Depending on the car, its age, and condition you could save a significant amount buying used. You can also look into financing a used car in the same way you would do a new one. Most dealers will offer financing on used cars for the same or lower rates than new cars, depending on the price, condition and features.

3. New cars will depreciate more significantly
The depreciation on new cars is something you should not overlook when buying. In fact, you should be able to find out the depreciation statistics about each car from the dealer or online. You don't want to be paying back loan repayments on car as it's losing value, it could end up costing much more than it is actually worth at the end of the payment plan.

4. Used cars usually require more maintenance and repairs
Sometimes with the money you save on a used car on the initial outlay, you can end up putting back into the car for maintenance and repairs. Statistically, used cars require much more maintenance and repair than new cars, so make sure you check the condition, paperwork, and history of the vehicle before you buy. You don't want to get stuck paying out hundreds for new parts a month after you've bought it and are still paying off the loan.

5. What about nearly new cars?
Why not go somewhere in between? Nearly new cars are generally classed as cars up to twelve months' old. They can provide a cheaper option but with newer features. They can also be bought with financing, as can both used and new cars, and generally in better condition that 'used' cars.