Aaaah. That new car smell. Quite intoxicating. Some say it’s even addictive, especially for petrolheads like the You Drive We Sell bunch. It’s a rite of passage nearly every adult alive hopes to experience at least once in their lifetime. But is buying a car new a financially prudent thing to do?
Probably not. And that sucks, we know. There is no way that we can manipulate a financial calculation that could prove in black and white that buying a new car is a good idea. What, with an average depreciation of 15-20% just driving it off the showroom floor to your house? Sheer madness.
Luckily, life for most people is not just about financially cautious. Otherwise, we’d all be rich, like the Luxembourgers. We’d also be mind-numbingly dull, also like the Luxembourgers. Shame.
Truth is, owning a car is expensive, whether bought new or used. So close your eyes and live a little. Here’s a (short list) of incidents when buying new is a relatively good idea:
If you can afford to pay cash for your car, or least pay it off quickly (so you don’t pay too much interest) and you plan to keep the car for a decade, buying new is fine. Well-looked after vehicles may actually even start appreciating in value again after 10 or more years. We gladly buy those for much moolah.
Again, if you can pay cash or finance over a short period, plus you don’t drive far regularly, your car will be worth more after a few years than most others. Huge plus points for buying it with a long warranty and/or service plan and you keep it meticulously clean and maintained, you won’t struggle to find a used buyer whatsoever. We want it too.
On the other hand Darren, that initial depreciation remains a thorn in the flesh. Also, the new car smell wears off quickly. Frankly, with 15% depreciation on a R500k car, that month-long new car smell costs R75k. Yikes. (You can buy a bottle of new-car fragrance for a fraction of that). Here’s a list of reasons when buying used makes more sense:
Most modern cars these days have transferable warranties and service/maintenance plans between 3 and 6 years or 60,000 to 100,000km. Additionally, most manufacturers and dealers can also offer you extended warranties and plans on your used purchase. Peace of mind sorted.
Used car lemons are theoretically a thing of the past. Among other rights, the CPA determines that a dealer cannot sell you a car “voetstoots” anymore and that you have a 6-month defect warranty on any car with a road-worthy certificate, excluding wear and tear of course.