Simon Smith
31 May 2023
We often receive questions from our clients about whether to go for a new or used car. While choosing a used car, particularly an older model and running it for the rest of its life, will almost always result in a lower overall outlay, and leasing a car will provide ‘hassle-free motoring’ with certainty around costs, there are a number of factors to consider. This guide, compiled by our team of new and used car experts, is here to help you with your decision.
Opting for a new car
Being the first owner, climbing into your new car with that fresh ‘new-car smell’, and ‘delivery miles only’ certainly has its attraction. Driving the latest model, with the latest tech and the latest safety features, has obvious appeal. Being covered by a manufacturer warranty and not needing to worry about MOT tests provides peace of mind. And with the supply chain situation improving, there is the choice of a factory order or a new car from stock. Finance-wise, new car packages tend to be more attractive than those offered for used, with lower interest rates combined with discounts and deposit contributions.
New Car Pros
• Being the first owner
• Choosing your preferred specification – trim, paint, options, engine, etc.
• Full manufacturer warranty provides peace of mind
• No unknown history or MOT tests to worry about
• Latest technology
• Latest safety features
• Better fuel efficiency
• More attractive finance packages
• Lower initial expenditure, and a set monthly expenditure
• No concern about depreciation or resale (leasing versus purchasing new or used)
New Car Cons
• Having to wait for a factory order
• Potentially a higher insurance premium
• Possibility of extra mileage charges if you go over allowance
• Possibility of wear and tear charges if you don’t keep the vehicle in fair condition
Going for a used car
From a ‘nearly new’ ex-demonstrator to an old workhorse and everything in between, there is certainly plenty of choice. But the slowdown in supply of new cars between 2020 and 2022 caused the price of used cars to rocket by up to 50%. While this looks set to tail off slightly by the end of the current year as lead times for new cars shorten, used car prices are still significantly inflated, in many cases as much as a new car.
Used Car Pros
• Lower overall outlay when choosing older models which have already depreciated
• Potentially a higher specification for a used car than a new car for the same amount
• Less worry about dents, scratches or dings
• Avoiding the initial financial hit of first three years’ depreciation (versus purchasing new)
• No need to wait
Used Car Cons
• Limited or no warranty
• Wear and tear meaning more likelihood of issues
• Responsibility for the expense of servicing, maintenance and MOT tests
• Significantly inflated prices
• Multiple names on the registration document meaning lower resale value
• Uncertainty over the car’s history
• Higher interest rates and fewer incentives
• More hassle and cost for peace of mind – independent history check, inspecting in person, test-driving in different conditions and over an extended time, having an independent report carried out, etc.
A third way?
Given the pros and cons of new and used cars, some clients ask about whether ‘nearly new’ might be a good option. Nearly new usually refers to cars under a year old and with fewer than 5,000 miles on the odometer. They are often ex-demonstrators, or used by dealership management. Thus, they are often high-specification models with options. They can also be ex-rentals, albeit these will usually have higher mileages than traditional nearly new cars.
Pre-registered cars are slightly different. As dealers have monthly and quarterly sales targets, registering a car with the DVLA means it is ‘sold’ – helping targets and bonuses. As with other nearly new cars, you won’t be the first keeper, which affects its residual value. And nearly new and pre-registered cars do still need to be approached in the same manner as other used cars – so getting a history check and finding out how much of the manufacturer warranty remains are essential tasks.
It is also worth noting that the finance deals offered on cars that are not brand new tend not to be as attractive, so be sure to work out whether any discount offsets a higher interest rate.
The Pike + Bambridge Promise
Whatever you end up choosing, the team at P+B will be with you every step of the way – it makes absolutely no difference to us which brand, make or model you go for – all that matters to us is that we provide you with all the information you need to make an informed decision, and give you fanatical support throughout your journey – ensuring the whole process is as simple, fast, and personal as it can be.
