BlogBudgetingNew or used? Don’t miss this important step in your research!

August 31, 2017by Women with Cents

[cs_content][cs_section parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][cs_text]This week we tackle another common dilemma, this time on the subject of cars!

Hi Tash – I hope you can help! My car is plagued with issues and is a total money drain, not to mention it also has a loan attached to it! I’m currently working on clearing a smaller loan which has an interest free period until later this year, then after that the financial priority is the car loan, and then the loan from the ‘bank of Mum’ for all the car repairs to date. But… I still need a car! So, what should I do?

  • Keep my current car until it is irreparable? 
  • Buy a cheap used car and replace it within a couple of years?
  • Buy a more expensive used car and hope to get another 15 years out of it?
  • Get a loan for a new car with bells & whistles, warranty and hopefully a longer engine life than my current one?

Help!

Sometimes cars are more trouble than they are worth aren’t they!

This is another subject where everyone you ask will have their own opinion on what is best, which is usually driven (pardon the pun) by their previous experience. For example, those who have only ever had trouble with second hand cars will tell you to buy new.

Personally, I have only owned second hand cars and never had a problem, so I would favour used.

Ultimately though, whether it’s more cost effective to buy new or used really comes down to the specific car you are interested in and the specific deals available.

Generally speaking a new car can lose a lot of value as soon as you drive it out the door, so for that reason I tend to favour used over new. But on the other hand, there is always a risk with a used car that it comes with its own problems.

So you may need to compromise. Perhaps looking at a used car that is an ex-demo or still fairly new with a warranty could be a happy medium. That said, here are the steps I would take when making my decision.[/cs_text][/cs_column][/cs_row][/cs_section][cs_section bg_color=”#252525″ parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false”]Step 1: Decide on budget. [/x_custom_headline][cs_text]How much can you really afford to spend? Ideally I would avoid obtaining finance but if you have no other choice make sure you check out the fine print (eg restrictions that apply based on the age of the car). You can learn more here about what to watch out for with car finance.[/cs_text][/cs_column][/cs_row][/cs_section][cs_section parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false”]Step 2: Do some research. [/x_custom_headline][cs_text class=”cs-ta-left”]Which cars do you like that fall in that price range? Make a list of year, make, model, is it new or used, and price. I’d read up on their features, look at reviews by other buyers and do a test drive where possible.

Some useful sites to help with your research are:
How Safe is Your Car
RedBook
Cars Guide
PPSR (formally REVS check)

[/cs_text][/cs_column][/cs_row][/cs_section][cs_section bg_color=”#252525″ parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false” style=”color: rgb(255, 140, 0);”]Step 3: Talk to a mechanic (or two!). [/x_custom_headline][cs_text]It’s amazing how many people, especially women, skip this part.

Your mechanic is a gold mine of untapped car knowledge and information. I’d find out in their experience which makes and models have a good track record for low maintenance costs and fewer problems, and which ones are known to be the ‘problem children’ that you should avoid![/cs_text][/cs_column][/cs_row][/cs_section][cs_section parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false” style=”color: rgb(255, 140, 0);”]Step 4: Do the math[/x_custom_headline][cs_text]Now that you have a short list of makes and models, take a look at what deals are around for the cars that are left on your list and compare them to RedBook to see just how much value you would lose in depreciation if you bought new vs old.

Then add up all the costs of ownership that you have identified both for the new and used car and take it from there.

For example, say you hope to own the car for 10 years. Add up all the likely costs including the purchase price, maintenance costs (use your mechanic as a guide and the car dealership if they include free or capped maintenance), depreciation (in other words, what’s the likely resale value in 10 years time) and see which one comes out ahead for you.[/cs_text][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false”]Important tip![/x_custom_headline][cs_text]Whatever you decide to do, remember the golden rule of building wealth is to spend as little as possible on items that lose value (like cars!) and put your money towards assets that will give a return on your investment.

As a wise (wo)man once said: buy the cheapest car your ego can afford!

Good luck and drive safe![/cs_text][/cs_column][/cs_row][/cs_section][cs_section bg_color=”rgb(37, 37, 37)” parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 0 0px 25px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false”]Submit a Question![/x_custom_headline][cs_text]Have a finance question you’d like answered? Why not drop me a line! Each week I would love to answer a question from the community. Click below to get in touch.[/cs_text][x_button size=”global” block=”false” circle=”false” icon_only=”false” href=”mailto:tash@womenwithcents.com.au” title=”” target=”” info=”none” info_place=”top” info_trigger=”hover” info_content=””]ASK TASH[/x_button][/cs_column][/cs_row][/cs_section][cs_section parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 25px 0px 0;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_image type=”none” src=”http://www.womenwithcents.com.au/wp-content/uploads/2016/07/Email-photo.jpg” alt=”” link=”false” href=”#” title=”” target=”” info=”none” info_place=”top” info_trigger=”hover” info_content=””][/cs_column][/cs_row][/cs_section][cs_section parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 45px 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][cs_text style=”font-size:12px;”]The information provided by Women with Cents is general in nature. It doesn’t take into account your objectives, personal financial situation or needs. Think of it as educational material in which to help you make more-informed decisions. We recommend you obtain financial, tax and credit advice specific to your situation before making any investments or financial decisions.

Sova Financial Pty Ltd Trading as Women with Cents. ABN 71 163 435 836 | Sova Financial is an authorised Credit Representative Number 443432 of Finsure Finance & Insurance Pty Ltd, ACL 384704, ABN 72 068 153 926[/cs_text][/cs_column][/cs_row][/cs_section][/cs_content]

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The information provided by Women with Cents is general in nature. It doesn’t take into account your objectives, personal financial situation or needs. Think of it as educational material that helps you make more-informed decisions. We recommend you obtain financial, tax and credit advice specific to your situation before making any investment or financial decisions.

Sova Financial Pty Ltd Trading as Women with Cents (ABN 71 163 435 836) | Sova Financial is an authorised Credit Representative (443432) of Finsure Finance & Insurance Pty Ltd (ACL 384704, ABN 72 068 153 926). Liability limited by a scheme approved under Professional Standards Legislation.