The Daunting Decision – Should You Buy New Or Used?

Buying a car in our country constitutes a huge expense – by world standards, pricing of cars in South Africa compared to income levels are way out of kilter.

Americans need to work a mere 23 weeks or so to be able to buy an average-priced new car – cash. South Africans may have to work several years, and with little cash for down payments, mostly rely on credit to afford the purchase in the first place. This inflates the total price even more after four or five years of payment.

No wonder second-hand cars are a popular choice! But the question is, are second-hand cars always better than new, or are new cars always a better option than second-hand?

The easy answer is that the solution lies in your level of personal income and ability to purchase outright, or finance.

While there are many, many motivating factors either way, also consider some of these pointers:

NEW CARS:

PROS

  • Your new car has not been used or abused by a previous owner, i.e. you know where it comes from – the factory. Conversely, unless you know for a fact that your potential second-hand car has a full service history and has led a pampered life, there is always a risk that something could give at some point down the line. With no back-up warranties, it could be a gamble and potentially expensive.
  • You get a car with full factory warranty and is often accompanied by a complete service or maintenance plan, together with roadside assistance. This constitutes tremendous peace of mind as it takes care of both the reliability and the personal safety factors.
  • If you intend on keeping a car for a long time (like a decade or more), new may be better.
  • You can customize – choose your colour, engine, trim etc.
  • New cars are safer and more fuel efficient than older models.

CONS

  • Purchase price is high, and your car suffers a rapid depreciation in value in its first year.
  • Insurance costs are higher.
  • All those factory extras you added? They means zilch come resale time!

 

SECOND-HAND CARS:

 PROS

  • The purchase price is much lower than a new car and depreciation will be slower – the first owner took most of the depreciation knock in the first two or so years.
  • If the car is only a few years old, you still have the benefit of the balance of a warranty or service plan on the original new car – many manufacturers offer 5-year/100,000 km plans; Hyundai was the first to introduce a 7-year/200,000 km.
  • You can use the car and not feel so sorry for it compared to a new one – i.e. a few scratches and dings, or ruining the interior, especially if you have kids or pets, may suddenly not be such a big deal.
  • You can buy a safer, more spacious, more powerful, better equipped and larger car for the same price as a brand new, smaller one.
  • If you buy a second-hand car from a dealer group with a certified used programme, the second-hand car is almost always as good as new, often with fresh warranties in place.
  • If you regularly swop cars (every year or two), the second-hand option makes more sense as you potentially lose less in that initial depreciation.
  • You don’t pay taxes if it is a private deal.
  • Insurance is vastly cheaper. Bonus!

CONS

  • Service history and reliability. While an owner may sell you a car that has not given them a day of trouble in all their years of ownership, there is no guarantee it may not break down the very next week after you take ownership. A good start to peace of mind is to check the service history. Check if they have been performed according to the manufacturer’s schedule, and if not by a dealer, then at least by a service agent for that brand or a reputable (RMI accredited) third-party service station.
  • Your options may be limited in terms of model, engine and colour choice.

 

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