A Guide to Buying a New or Used Car

New cars win on interest rates but used cars are still the healthier investment.

There’s nothing like the satisfaction of driving a brand new car off the showroom floor. That ‘new car smell’ and the peace of mind that your choice of wheels hasn’t been abused by neglectful previous owners or worked on by dodgy mechanics also helps.
Of course, these moments are short-lived. Within just a few weeks, your car isn’t new anymore and its value has already started to surge southwards, a situation that begs the question: is it really better to buy new?

New cars: the best features and the fastest initial depreciation come standard

Low interest rates, extended warranties, and access to the latest technologies are all positives for buying a new car. While contemporary features merely enhance the feel-good factor, low interest rates have tangible financial benefits; banks offer better rates on new vehicles because they’re worth more and have not yet been affected by depreciation… they will, however, lose around 10% of their value the moment you take it for its first drive, which is a greater loss in value than you’d see if buying second hand.
Any finance institution or dealership will also require that your new vehicle is fully insured until it is fully paid, and naturally a new vehicle will result in a higher monthly premium.

Used cars: cost-saving the biggest advantage

With new cars depreciating rapidly over the first three years, buying used means you benefit from a much more affordable purchase price. It’s worth researching the residual values of your chosen make and model, as some cars depreciate a lot quicker and this could affect your choice of car. Lower insurance premiums are another bonus, and it’s worth noting that a low-mileage, two- or three-year old model with a perfect service record could potentially be a better choice than a new car, with all the teething issues ironed out.

So, should you go the new or used route? The answer depends entirely on your viewpoint.

Looked at from a purely financial perspective, a used car comes out on top easily. New cars are simply poor investments because of their steep initial depreciation, something that won’t affect a used model to the same extent. Savings on fuel economy and the inclusion of a warranty on new cars are also unlikely to make up for the added initial cost.

As for the more superficial aspects of car ownership such as access to the latest technologies, a new model obviously wins. You are also unlikely to have to worry about maintenance for some time, which for many, is enough incentive on its own.

In both cases, we believe that each buyer should weigh up the pros and cons of new vs. used before making a final decision, and to consider the following:

  • If you can afford a more expensive used car, downgrading to a cheaper new model could offer you the best of both worlds.
  • Used cars could be the smarter option for savvy buyers who are familiar with cars and the motor industry – if you find a good deal, you could end up with a much better car than you could have gotten new (and for the same price).
  • Your attractive warranty on that new car will likely run out before your loan payment period.
  • If buying used, try to anticipate the major maintenance costs and factor those into your budget, too.

If it all sounds like a maze, our recommendation is to consider a two-year old model from a respected manufacturer at the amount you can afford. This will get you a balanced combination of value, modernity, reliability, and likely the remainder of a service plan and/or warranty.

Contact Yes Loans and get the best car-buying advice


Common Car Insurance Scams and How to Avoid Them

Staged accidents and fraudulent agents are just two of the common car insurance scams out there.

There are few things worse than getting involved in a car accident. Besides the possibility of personal injury, there’s also the damage caused to one of your most valuable assets, the trauma, and inconvenience this brings.

This is when we rely on our insurance cover, but car insurance scams mean that many people are vulnerable without realising it. Knowing what insurance scams to look out for is the first step in making sure you don’t get caught up in an emotional legal dispute.

Staging Accidents

In this scenario, the scammer will signal that they are giving you space to move into traffic and, when you do, they will smash into you. As the scammer originally had right of way,  they will deny having given you the go-ahead, which leaves you liable for the damages. Watch out for staged rear-endings; in this case, the scammer will suddenly stop in front of you, making it difficult for you to avoid crashing into them. They do this knowing that these types of accidents are almost always viewed as the fault of the driver at the back.

There are many other examples where scammers will stage an accident, and the best you can do is to keep alert, maintain your position in your lane, keep a safe following distance, and make sure you always have right of way before proceeding. You can also help to defend your case if you have a dashcam installed and running in your car at all times. High resolution video footage can often work in your favour, highlighting why you took certain actions on the road.

Faking Injuries

Even in the case of minor fender-benders, some scammers will fake an injury from a car accident in an attempt to claim medical expenses from your insurer. Whiplash and random pain are often mentioned as the injury, as these are difficult to view on an x-ray machine or to medically disprove. An immediate red flag is if the other driver only starts mentioning pain or physically reacting to it when the police arrive. You can safeguard yourself from such a scam following the accident by filing a police report, even for a minor accident, and noting the minimal damages; doing so will raise suspicion about medical claims from the other driver.

Exaggerated or Bogus Damages

In what may have been a genuine car accident, sometimes the other party will attempt to increase the cost of their claim by inflicting additional damage to their own vehicle. Although it can be difficult to think clearly immediately following a crash, we’d advise you to snap a good few pictures of the accident scene and both cars – if it is safe to do so – as these pictures can be used to refute a bogus claim.

Fraudulent Agents

Sometimes, car insurance scams take place before an accident ever takes place. Agent fraud is one such example, whereby your premiums go straight into the pockets of a sham agent without your policy ever having been set up. In the worst-case scenario, you will only find out when you need to make a claim, only to learn that you were never covered. It’s up to you to consult only trusted agents and to verify their credentials in any way you can. If you have taken out an insurance policy directly from the insurance provider with contact details found on their corporate website or advertising campaign there’s a good chance you are in the clear. However, if you have taken out your policy from a phone call that you did not request, you may have reason to be concerned. To confirm your policy, contact your insurance provider via contact details on their website and ensure they have your policy details in their system. Also, look out for extra coverage being added to your policy or a decrease in insured value on your car without your knowledge, which can add hundreds of dollars to your premium over the course of a year or significantly reduce the insurance pay out in the event of an accident.

Car insurance is essential, but it’s not enough to simply sign on the dotted line. Every driver should research their chosen insurer meticulously, while remaining vigilant on the road to avoid the worst.

We can help you get the best car insurance for your budget and needs. Contact us today for an insurance quote on your car.