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Buying a new or used car: what are the pros and cons of each option?

Buying a motor can be stressful, so we've listed the positives and negatives of new and used cars to help you.

There are so many options when buying a vehicle that it can be a little overwhelming if you aren't 100% sure what you are looking for.

The benefits and downsides of buying a new or used car can be tricky to navigate because there really is no right or wrong answer.

Ultimately, everything comes back to your personal needs for you and your family, and how much budget you have to play with.

Due to the coronavirus pandemic, new and used car sales were down in 2020, due to the economic uncertainty and the fact that for large parts of the year we were in lockdown and the necessity to go out and about were reduced.

It's been a turbulent year for car dealerships. They've been unable to fully operate due to the restrictions and a lot of new car sales have been made online, with click and collect becoming a popular option.

The past year has shown that people can - and may be more likely to - shop online in the future, with the growth of several online car retailers growing exponentially. 

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That said, with more restrictions easing on April 12, it should hopefully see consumers flock back to showrooms and increase face-to-face sales within the automotive industry.

Let's look at the pros and cons of buying a new or used car and other potential factors that could impact your decision.

Brexit

Let's start with Brexit, shall we? The topic that we've probably read about or heard on the news almost every day since the referendum in 2016.

The transition period of the withdrawal of the UK from the European Union (EU) finally ended at the end of 2020 and many were wondering how it would affect the motor trade industry, which in turn could affect the cost of buying a car moving forward.

Had the UK been unable to make a deal with the EU - also referred to as a 'no-deal Brexit' - there would have been a 10% tariff on importing and exporting goods, which car manufacturers would have had to account for.

In turn, this would have led to a price increase on vehicles as manufacturers tried to make back their money lost on the tariff.

But due to the last-minute trade deal agreed, that will no longer be an issue and we should not see an increase in buying a car.

Paying for a car

There are several different ways you can purchase a new or used car.

You can buy with your credit card so you pay back your own bank at rates that suit you, providing you are making the minimum monthly payment and not missing any deadlines.

You can use savings and pay for everything upfront to own the car outright.

You can use personal leasing where you take out a long-term rental agreement, paying a fixed fee every month for an agreed period of time. 

And lastly, you can take out a car finance agreement, which is what 90% of consumers do. 

This allows you to be in control of the length of time you want to take to repay the borrowed amount, gives you the option to own the car outright, and allows you to spread the cost across the months at a fixed rate.

If you already own a car on finance and are in a positive equity position, you can trade the car in to help pay the deposit or some of the cost of the new car.

How Car Credible can help you

Here at Car Credible, we can help you understand whether you are in a positive or negative equity position, as well as provide you with your depreciating car value, early settlement figure, and much more.

We will appraise your finance deal for free, and provide you with a personalised dashboard where you can keep track of all of your financial details in one place.

We'll update this automatically every month and provide you with notifications to let you know just what has changed.

If this sounds like something you could benefit from, sign up today for free by following the image below, and get an immediate and clearer understanding of what your current car finance deal looks like in the simplest way.

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Buying a new car

There are many obvious benefits to buying a new car.

It's going to be the latest model with the most technologically advanced features, both for general usage and safety.

It will likely be more economical in terms of its fuel efficiency and emissions levels, meaning you could benefit from reduced taxing.

You can also personalise exactly what you want and the features it comes with, making it completely unique to you.

It should also come with a warranty lasting at least three years, meaning if anything is wrong with it, you can get it repaired or replaced.

The downside is certainly its depreciation, which is the difference in price from when you buy it and sell it on. 

New cars start depreciating as soon as you drive off of the forecourt and can be worth less than 50% of what you paid for it after just three years.

However, this isn't new information and you'll be fully prepared for this when you trade in or sell on your car down the line.

As mentioned previously, you can track the monthly depreciation value of your car by creating a Car Credible account here.

Buying a used car

This method has grown in popularity in recent years, particularly as the online market has increased quite rapidly.

The first pro to this is the depreciation aspect we mentioned above. If you buy a used car over three years old, the likelihood is it won't lose much more of its value. This means you shouldn't lose too much money if you look to sell it on again in the future.

You can also buy from dealers, and some manufacturers run schemes with dealers which can be good news if you're looking for a particular model.

They will also tend to offer some warranty if things go wrong too.

There are however a couple of downsides, but can be easy to overlook if the deal suits your needs and budgets.

Firstly, you don't know the car's history. It will have been owned by at least one previous owner and therefore might not have all of the features you want and may have some wear and tear.

Buying privately would mean losing out on a potential warranty and any repairs or issues would come straight out of your pocket.

You should try and do some research into the car's history if you can to see just how many miles it has done. 

Some dodgy sellers will try to tamper with the car's odometer to make it seem like it has lower mileage, but this can all be checked fairly easily.

There'll always be positives and negatives when doing anything, so just be sure to do a little bit of research before taking on a used car.

Buying a nearly new or pre-registered car

This method of purchase means the car has previously been leased or used for demonstrations, window displays, and test drives.

They essentially belong to the dealer as opposed to having been owned by a customer and will have low or zero mileage.

You'll find they are cheaper than new cars, despite having a similar mileage and because they are technically used, you won't lose as much in depreciation as you would owning a new car from day one.

However, it could still affect the resale value as the dealership would count as a previous owner even if there's zero mileage, so that would count against you when selling as you'd need to declare a previous owner.

Nearly new cars usually have a couple of thousand miles on the clock which you would know beforehand so shouldn't come as a shock, but worth considering before going ahead with a deal.

Typically, dealerships handpick the main features of the car to appeal to a wide target audience which could be seen as a good or bad thing.

It would be good in the sense that the features appeal to everyone and hopefully that includes you, but bad that you wouldn't be able to customise them to fit your needs.

Summary

In summary, all three car buying methods are viable options and should be considered based on your needs and budget.

Think about what you and your family require from the car before making your decision. If you only need it as a runaround to take the kids to school or do the weekly shop, then perhaps a used car would fit the bill as you'd be able to buy reasonably cheap and sell on at not-too-big a loss if you wanted.

But if you used your car for work regularly, liked to take long road trips, or just wanted something fresh and customised to your needs, then a new or nearly new car would be most beneficial to you.

Everyone is different and we're certain you will find something out there for you. Just remember to do some research beforehand and create a budget that you stick to.

If you have a current car finance deal, please don't hesitate to check it out using Car Credible via the banner below.

We can show you everything you need to know about your deal and help you track it monthly all in one clear and simple-to-use dashboard.

Sign up now to access all our latest features.

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