In last week’s article, we spoke about the potential pitfalls involved in buying a new vehicle. Continuing on the theme of purchasing a vehicle, we look at whether its better to buy a “new’ or “used” vehicle.`

New or Used?

When you’re thinking about buying a car, one of the most important decisions you will make is whether you should purchase one that’s brand new or used. There are several different factors to consider when you make this decision — the differences in prices, financing, performance, insurance costs, reliability, and even the overall buying experience can have a big impact on what you ultimately decide.

Let us look at a few different scenarios. You have the young university student who wants a good looking car with a bit of street cred, and with a decent number of kilowatts. You have the single, working mom who commutes to Pretoria every day and wants something reliable, fuel efficient and cheap to maintain. You have the outdoor loving dad who needs something comfortable for 2 adults and 3 children, and to be able to tow a camping trailer. I know each of these people. They all had a budget of around R160 000.

The university student opted for a gently used 2018 Renault Clio with under 50 000kms on the clock. The working mom bought a brand new Nissan Micra Active. The outdoor loving dad found space in has garage for an older, 200 000km Mitsubishi Pajero. Each of these individuals made a calculated choice whether to go “new” or “used”. The dad went the used route. He got lots of car for the money, which is well worth the maintenance costs which come with vehicles of that age. The single mom went the ‘new’ route – the 3-year/90 000km service plan and 6 year/150 000km warranty lets her sleep soundly at night. The fuel consumption (half of  her previous vehicle’s) is just the cherry on the top.

For those still in the decision-making process, let us have a look at some of the pro’s and cons of buying new or used.

Of course, this list is far from exhaustive. We have taken the two extremes – a brand new car versus an old car with no service history and a few hundred thousand kilometers.

In truth, you can always find a happy medium. A demo car or lightly used car can save you a considerable amount of money over a new one. And in most cases, the vehicle will have a full-service history and a large chunk of the service plan and warranty remaining.

Mitigating Risk on Used Cars

For those who are out of manufacturers warranty or service plan, there are a large number of aftermarket service plans available. Some dealerships will try sell you a pre-paid 2-year warranty for a lump sum. I am not a fan of this product. If your car is stolen, written-off or merely sold within the two years, you lose out on a warranty you paid upfront for.

There are a number of pay-per-month extended-warranties that I have come across:

1. AA Extended Warranty - Offers a variety of packages and up to R50 000 of cover. Your vehicle must be less than 12 years old and be under 250 000kms to be eligible.

2. OUTsurance Motor Warranty – Provides a variety of packages, with different limits on repair costs covered. Package prices are fixed and do not depend on what vehicle you drive. Your vehicle must be Your vehicle must have a full-service history, be less than 15 years old and under 300 000kms to be eligible.

3. Discovery Insure Motor Warranty – Provides Unlimited cover for 36 critical vehicle components. Product price is very much vehicle dependent, and if your vehicle falls into either the “high-risk” or “high-severity” category, it can get very expensive. Vehicle must have a full service history, be less than 10 years old and under 250 000kms to be eligible.

Each of the warranties differ in the number of parts covered, and the amount they will be covered for per claim. As with any warranty, be sure to read the wording carefully and know what your responsibilities are in terms of maintaining and servicing your vehicle timeously and correctly.

Choosing a low risk vehicle

 Unfortunately, hijacking and car theft are, unfortunately, a reality which has to be factored into our daily lives. Many people choose to avoid high-risk vehicles, both for their personal safety as well as the additional monthly insurance costs.

If this is a factor in your decision making, have a look at the infographic provided below:

Top 10 Hijacked Passenger Vehicle Brands:

1. VW
2. Toyota
3. Ford
4. Citroen
5. Kia
6. Hyundai
7. BMW
8. Audi
9. Renault
10. Chevrolet

Top 10 Hijacked SUV Brands 

1. Toyota
2. Land Rover
3. Nissan
4. Mahindra
5. VW
6. Jeep
7. Porsche
8. Renault
9. Ford
10. Daihatsu

In Summary

In the end, whether it is better to buy a new or a used car really depends on your situation. If you have the money, buying a new car offers you much greater value in terms of financing, fuel economy, performance, safety, reliability and the amount of selection and choice you have.

But if you want to get the best value overall, or if you are on a limited budget (or both), then there is a big benefit to buying a used vehicle that all of the benefits for new cars just can’t overcome.

If you go the used car route, you can mitigate a lot of the risks by buying your vehicle from a reputable dealer, ensuring that it has a full service history and perhaps even purchasing an extended warranty.