It always used to be seen as something of a concession to go for a secondhand car but these days the stigma has shifted. Indeed, it is now seemingly the exception rather than the rule to go for a brand new car, as more and more drivers are starting to realise what a bad investment they can be. There’s that cliche that a car loses the lion’s share of its value the second it drives off the forecourt and whilst this isn’t technically the case every time, there is at least a shred of truth to that adage.
Buying a brand new car is, more often than not, simply foolish in this day and age, when there are so many secondhand options available online and offline. You can even buy secondhand on finance with no deposit if you apply through Go Car Credit. But why exactly is buying brand new such a bad idea in this day and age?
Cost
New cars today are significantly more expensive than they were even a decade ago, with prices rising faster than average salaries. Of course, this isn’t only true for cars (it’s true for houses too, and just about any other ‘stepping stone’ purchase) but whereas ‘secondhand’ homes are rarely much cheaper than their brand new counterparts, you can often find a secondhand vehicle for more than half the price of a new version.
Depreciation
A car is a major depreciating asset that will almost always lose value over time, with the largest depreciation happening in the first year. Indeed, it will lose around 10% of its value the day after its sold and then 20% after 12 months.
Insurance
Opt for a new car and whilst it might be factory fresh, insurance payments will always be higher simply because its technically worth more than a secondhand car. Then there’s gap coverage to consider. In fact, there are few real benefits to buying new from an insurance perspective.
Loans
Whilst there are options available for those who are strapped for capital, generally speaking, loans for new cars are substantially more expensive. You’re also likely to be trapped in a situation where, if you decide to sell your car a few years down the road, you might actually end up owing more than the car itself is actually worth. You might be tempted by the low monthly payments offered on finance but you’ll always end up paying more and for longer.