Car choices: should you buy new, used... or 'nused'?
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The first question around buying a car is likely one you’ll have already answered yourself: price. While more expensive is often better, value-for-money is often a big consideration. Along with other factors, it could be the difference between a base model and mid-spec, preferred options or even a whole different model.
If you’re in the market for a relatively modern car, the first real question you’ll probably collide with early on is “new or used?”.
We say collide, because it’s a hot topic among many armchair experts, who have very firmly held opinions - quite often opposing opinions.
It really does depend on the deals on offer, how long you intend to keep a car – and maybe a little bit of emotion. Because what "feels" right is important as well. Decisions made with the heart can often last longer than those made with the head… and paradoxically, vice versa.
The case for new
Design and technology moves fast in the automotive world. Most car models get upgrades every year and so it stands to reason that buying new gets you into the very latest in all respects: technology, comfort, features, safety, performance and economy.
You also get more scope on colour, specification and so on. Because you’re starting from scratch, you can (hopefully) have the car you really want, that no-one else has touched - and that’s the nicest feeling.
Same for safety: a brand new car will be bang (hopefully not) up-to-date on safety equipment for that particular model, and there are improvements every year. It’s getting increasingly difficult, for example, to find a new car without radar cruise control.
With a new car you also get the benefit of a full warranty right from the start – three years, five years or whatever is being offered. So it’s a long period of peace-of-mind motoring.
The biggest burden of buying new is one that scales up or down depending on the initial cost: depreciation. In 99.9 per cent of cases, a car will literally lose money when it’s driven out the showroom door, because depreciation is at its steepest when a car is brand-new.
But that’s less important if you're planning to keep the car for a long period, where its depreciation can balance that capital cost against the benefit of the warranty and any service plans that might be offered.
Or the other way around might be more appealing. It’s all personal, and it’s all worth considering, especially if the asking price is the same, and the appeal of absolute new and a full warranty are the most appealing aspects.
There’s also the offer of showroom deals to consider, such as low interest rates (as low as zero per cent!), deferred payments, and run-out deals, along with lease versus finance options. But we’ll deal with those choices in another part of this series.
The case for used
For decades, the wisdom of buying used and avoiding crippling new-car depreciation has been handed down from Kiwi parents to children. And yes, there’s truth in that.
Consider that 50-60 per cent depreciation is pretty typical over the first three or four years of a car’s life; it means that buying used, you’re making a big capital saving right up front on a car that’s still pretty modern.
While a used car might not be the very latest, it might not necessarily be lacking too much in the way of comfort/convenience and safety equipment compared with the factory-fresh equivalent. It depends on the model cycle of the car in question (which can be anything from one to five or more years), but compare specs and you might be pleasantly surprised at how much you’re getting for your money.
Three to four years old is a good age to aim for: it’s a common length of ownership for new cars and most leased vehicles are turned over at this time.
You might even still have the balance of some new-car warranty left; if not, a vehicle of this age should still be reliable and you can always invest some of that money saved in an extra-cost warranty programme.
For older cars purchased through a licensed dealer, at a minimum there's the Consumer Guarantees Act (CGA) and Fair Trading Act (FTA). The Motor Trade Association is also there to mediate if necessary.
Read More: New Zealand's favourite used imports
If you do decide to go the used route, you can get independent help from the AA in a number of ways: it offers odometer checks on used imports, which you can identify by an Odometer Verified sticker on the windscreen. The AA also offers a Safety Certified rating (again, via a sticker on the windscreen) that's more comprehensive than a standard Warrant of Fitness and there's the AA Appraised Used Vehicle service that can be carried out on your prospective purchase, which includes a 43-point mechanical check.
Good late-model used cars are not always easy to come by: industry contacts tell us that there’s been a shortage in recent times, which is why the much-talked-about increase of ex-rental used car supply as a result of Covid-19 might actually be a win-win for buyers and the industry.
DRIVEN talked with Andrew Simms dealer principal Matthew Wales earlier this year about the ex-rental used-car market post-Covid: “There are really well-priced used cars that are much newer and much lower mileage than we might usually see.
“But we also tend to think that alter in the year we’re likely to see a contraction of supply. It depends on new-car volume and how the rest of the world behaves.”
If the fear of the largest percentage of depreciation off-setting the "joy" of buying brand new, there are real savings to be had when buying used, with certain considerations.
The case for ‘nused’
There’s another category, of part-new-part-used car, which we’ve decided to call “nused”. Free feel to embrace that.
We’re talking about ex-demonstrator cars, which are still owned by the dealership but have served their purpose after a few hundred or a few thousand kilometres, and are ready to be sold, so the next new one can come onto the fleet.
These are another great Kiwi buying tradition, as a nused car (see how catchy that is?) offers most of the advantages of buying new, with some of the capital-cost saving of used.
It’s fair to say that dealers would still much rather sell you a new car; nused models are sometimes employed as a sweetener or saving grace for a sale that looks like it might be slipping away. You might well get a bargain, but the same arguments apply about getting an even better finance deal on brand-new. And it also removes the personalisation part, as the nused car is take-it-like-it-is.
Selling lots of nused cars does accelerate depreciation, so car brands aren’t always keen. For example, as part of its Drive Happy retail programme, Toyota NZ no longer allows its stores to sell demonstrator cars early at a discount; they have to serve the full term of demo-duty before they become available.
But if the model, specs and options are what you’re looking for, or at least happy with, then a nused car is a very appealing way to save money if the odometer doesn’t literally have to show a row of zeroes.