Should you buy a new or second-hand car?
Whether buying new or used, South Africans consistently show a strong preference for value-for-money brands, such as Toyota, Volkswagen or Suzuki.
Given the overall increase in financial pressures experienced by South African consumers, such as rising food and utility prices, it is important to stretch your rands as far as possible when buying a car.
Ernest North, co-founder of Naked insurance, says one of the most important decisions you will make is whether to get a brand-new vehicle or buy a used car.
'Choosing between a new or used car isn't just about the retail price; it's about what will fit your financial plan and lifestyle the best.'
New or used car?
He adds that buying new and buying used both come with their trade-offs and benefits.
Understanding the latest market trends and how the car will impact your finances is crucial for making informed choices. There are ups and downs in both scenarios of buying new or used.
According to the National Association of Automobile Manufacturers (Naamsa), new vehicle sales decreased by 3% to around 516 000 units in 2024.
The used car market has also had its ups and downs, but data suggests demand for second-hand vehicles is outpacing new models by more than two to one. Whether buying new or used, South Africans consistently show a strong preference for value-for-money brands, such as Toyota, Volkswagen or Suzuki.
North highlights that the decision to buy a new or used car will depend on factors such as your budget, the length of time you plan to keep the car and the features you are looking for in the car.
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Buying a new car
Pros of buying new
North gives a few lists of the pros of buying a new car.
• Reliability – No previous wear and tear. Covered by a full manufacturer's warranty.
• Lower interest rates – Lenders offer better financing deals, as new cars are considered lower risk (although this depends on an individual's risk profile).
• Latest features – Access to the newest tech, safety and fuel efficiency improvements.
• Lower maintenance costs – No major repairs needed for the first few years.
Downsides of buying new
• Depreciation – Usually a car loses 20-30% of its value in the first year.
• Higher insurance costs – Comprehensive coverage is required if financing is involved.
• Expensive upfront – Even with lower interest rates, the total cost is higher.
Buying a second-hand car
Advantages of buying second-hand
• Slower depreciation – The value of a car stabilises after the first few years.
• Lower purchase price – You can pay less for an equivalent car than you would if buying new. That means you can save money or get something with better specs and features for the same price.
Disadvantages of second-hand
• Higher interest rates – Lenders often view used cars as riskier, which can result in slightly higher rates.
• Potential maintenance costs – Older cars may require more frequent repairs and their warranties may be limited.
• Unknown history – Unless certified pre-owned, previous maintenance and accidents could be a concern.
ALSO READ: Buying a car from a private seller? Here are some tips
Tips on how to get the best deal
North offered eight tips on how to get a good deal.
Conduct online research: When buying a used car, remember that factors such as mileage, the car's condition and its service history will all affect the price. Knowing what to pay will help you negotiate a better deal. Watch out for deals: Keep your eyes open for incentives such as cash back, trade-in assistance or low-interest financing. Promotions may help you get a better deal when dealers are struggling to move cars. Negotiate: You can often negotiate a better deal, depending on the dealership, the brand and the demand for the specific model. Be cautious of extras: Dealers will often try to include added extras when you buy a car. Some can be worthwhile, like smash-and-grab glass tinting and service plans. Others, such as paint protection or premium audio, are usually not worth the investment. Consider certified pre-owned (CPO): CPO used cars are popular because they come with manufacturer inspections and warranties, offering extra reassurance. Choose the right time to buy: Keep an eye on sales trends. When sales are down, dealerships may be more willing to negotiate. Obtain a vehicle history report: A vehicle history report from services like Dekra Automotive or the South African Insurance Association's online tool can flag any accidents or repairs the car has been involved in. Do not forget insurance: Whether you drive off in a brand-new car or used one, you need to protect it with insurance.
NOW READ: Is it still worth buying a car?
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