Business Car Finance

New Car or Used? Making the right choice

It’s a nice feeling driving out of the car yard in a brand new car, though it’s not a nice feeling knowing that as soon as you drive off the block a new car depreciate in value immediately.
When buying for private use and not for business you may not be able to claim depreciation as a tax deduction. This is a cost that should be considered when buying a new car. Many people ignore this substantial cost because it is a cost that you may be unaware of. A new car loses about 40% of its value in the first three years of its life.
The benefit of purchasing a new car offers security. In other words you don’t want to be buying someone else’s mechanical problems, and any manufacturing faults will generally be fixed quickly and at no cost to you under the warranty.
When you purchase a used car, the first owner has absorbed the steepest depreciation cost. If you buy from a private sale, you save on dealer commissions. Online and car yard auctions and consignment sales yards often offer great deals.
There are significant risks attached to buying a used vehicle. Maintance costs increase as cars age, and you may not be able to verify that the former owner maintained the car properly. If the previous owner hasn’t kept the car up to log book service standard, then major mechanical failures could be just around the corner.
New cars are also generally safer than older cars, and often have wanted features that you need to fit to a used car at extra cost.
Many buyers achieve major savings whilst enjoying most of the benefits of a new car by opting for a near-new demonstration model. These cars have been used maybe once or twice and are in great condition but sold at heavily discounted prices.
A ‘certified pre-owned’ vehicle can also bridge the gap between new and used. Although pre loved cars sold under this program are subject to a rigours inspection, and are usually covered by a manufacturer warranty.
The final decision will ultimately be based on affordability and your financial status. If you do decide for a used car, be sure to have it thoughly checked for mechanical soundness. Motoring associations such as RAC, provide independent inspection services. Also, check that the seller has valid legal title. The law will generally require the seller to offer some warranty, so check the terms and investigate the seller’s reputation carefully. Buying from a reputable dealer may cost a little more initially, but it may save you both money and headaches.