New cars vs used cars

Should you buy a new or used car? Make the right decision and drive away without regret.

We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!

It’s the age-old question that every single car buyer needs to decide on: buy new or get a used car? Both have pros and cons, including some that you might not be aware of until it’s too late.

Generally, buying new carries all the advantages except price. As such, the question is whether the extra cost is worth the extra benefits.

This guide runs through each option in detail so you can decide what’s best for you, and drive away confident that you’ve made the right decision.

Pros and Cons of new cars and used cars

UsedNew
PriceCheaperMore expensive
Car optionsLimited to what’s availableWide and varied
Required knowledgeNeed to know what to look for in a used carNeed to know how to avoid expensive sales tactics
Financing optionsFewer optionsMore options
Information availableTypically general information onlyManufacturer stickers, documentation and more
WarrantyVaries depending on the specific carManufacturer and dealer warranty

Factors to consider when deciding between new and used

Price Vehicle options Required knowledge Financing options Information available Warranty

Price

The price difference between a new car and a used car depends on how old the used car is, what kind of model it is and the condition of the second-hand car. The best way to work out how much you’re saving by buying second hand is to look at how much the same vehicle costs when new.

However, it’s generally a very safe assumption that a used car should cost at least 20% less than a new model assuming it’s still in almost “as new” condition. This 20% depreciation occurs as soon as a new car is driven off the lot, and in the coming years it will depreciate more.

With the average cost of a new car being about $30,000, you can generally save at least $6,000 simply by buying used, even when taking advantage of various new car cost-saving measures.

This is the most prominent advantage of buying a used car, but you need to consider whether it’s worth the downsides.

Vehicle options when deciding on a new or used car

When you buy any car, your options are naturally limited to whatever’s being sold. However, with used cars, there are generally considerably fewer options. For example, you might find the right model in the wrong colour and might want to factor the cost of a new paint job into the price

You might not even be able to find the type of vehicle you’re looking for, or might spend a lot of time travelling a long way to check one out only to find that it’s an overpriced rust bucket.

Conversely, you might get lucky and find a used car that’s exactly what you are looking for with all the extras you wanted at no extra cost.

Overall, getting a new car gives you a lot more consistency. Once you do your research and check prices, you have the assurance that you’ll be able to find what you’re looking for. If you’re time-poor, this can be a distinct advantage.

Required knowledge

If you don’t know how to check a used car thoroughly, you’re at risk of buying a lemon. Fortunately, you can find checklists of what to look for to make it easier. However, there’s really no substitute for genuine experience, so if you’re unfamiliar with cars it might be safer to buy new.

The safety of new cars goes beyond protecting your wallet, as new cars also have the advantage of clear ANCAP safety ratings, which are only relevant for new cars. When assessing the driver safety of a used car, you’ll instead need to rely on USCRs and a general check of current safety features.

If you’re not a car person it can be nerve-racking to buy both used and new, but the risk is generally much lower when buying new.

Financing options for new or used cars

There is considerable overlap between used car loans and new car loans, and the same financiers will often let you purchase either kind of vehicle with the same car loan. However, the terms you can access are often determined on a case-by-case basis which can lead to differences.

You are often able to access lower rates for new car loans, but you’ll still be paying more overall, which generally means paying back more overall.

The terms of a car loan are individual to each purchase and each borrower. As such it can go either way and doesn’t clearly favour either new cars or used cars.

Information available

New cars come with a range of verifications from both the manufacturer and the dealer. An example is the yellow sticker on the windscreen that proves its fuel consumption, letting you make a more educated decision. You might not find it on used cars, and if you do there’s no guarantee that it will be accurate anymore.

ANCAP safety ratings are similarly reliable verification of how safe the new car is, tested under laboratory conditions. A used car might also be fraught with “invisible” problems you won’t notice until later down the track, like one airbag that won’t work.

When buying used, you should always do a car history check before handing over the money. This highlights any outstanding financing that may be hanging over the car and its service history, including whether it’s previously suffered significant damage that may not have been effectively repaired so much as covered up.

However, even a full car history check isn’t a substitute for the reliability you can get from a new car, it’s simply a way of getting a bit closer.

Warranty

Don’t underestimate the importance of this factor and the extent of its benefits. It can make an immense difference between used and new, and should also be considered when deciding between two used cars.

When new, a car comes with a warranty that guarantees reliability and satisfactory performance for a total of 20,000km driven since manufacture, or 12 months after initial purchase, minus 1 month for every 2,000km driven, whichever expires first.

If a used car meets the criteria, then it’s also protected by a warranty for however long it has left. If you’re tossing up between two used cars, it might be worth deciding in the favour of one if it still has a reasonable amount of the warranty remaining.

If the original owner purchased an extended warranty option, then this too might remain with the used car even after it changes hands, but you should check the actual warranty documentation to make sure.

However, with new cars, you’re entitled to the full warranty right from the beginning, so it’s predictable and guaranteed.


Used cars are considerably cheaper, but you’re not getting as much as you do with a new car. The question is whether those new car benefits are worth the extra cost for you.

Compare financing options for new and used cars

$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Service Fee Monthly Repayment
IMB New Car Loan
4.88% (fixed)
5.23%
$2,000
1 to 7 years
$275.12 ($250 Application fee + $25.12 PPSR fee)
$0
You'll receive a fixed rate of 4.88% p.a.
A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one that's up to two years old.
Plenti Car Loan
From 4.89% (fixed)
5.44%
$10,001
3 to 7 years
from $249 to $799
$0
You'll receive a fixed rate from 4.89% p.a.
Borrow up to $100,000 with a Plenti Car Loan and benefit from no early repayment or exit fees.
Credit Concierge Car Loan
From 2.99% (fixed)
4.07%
$10,000
1 to 7 years
$350
$8.50
You'll receive a fixed rate of 2.99% p.a. with a comparison rate of 4.07% p.a.
Get access to over 20 providers to fund a new or used car.
Loans.com.au - New and Dealer Used Car Loan
From 4.67% (fixed)
5.22%
$5,000
3 to 5 years
$400
$0
You'll receive a fixed rate from 4.67% p.a. based on your risk profile
Finance a new car and benefit from features such as fast approval, no ongoing fees and an optional balloon payment. Settle the loan before 30 November 2021 and enter the draw to win a $1,000 fuel gift voucher. T&Cs apply.
Stratton Finance New Car Loan
From 3.85% (fixed)
4.05%
$10,000
3 to 7 years
$700
$8.25
You'll receive a fixed rate from 3.85% p.a. depending on the lender you are approved with
Apply for up to $250,000 and use cash or trade in a vehicle to use as a deposit. Optional balloon payment available.
NRMA New Car Loan
From 4.99% (fixed)
5.69%
$5,000
1 to 7 years
$499
$0
You'll receive a fixed rate from 4.99% p.a.
Purchase a new or used car up to 3 years old and benefit from a fixed rate and no monthly fees. Pre-approval available within 5 business hours.
Heritage Bank Car Loan
4.89% (fixed)
5.53%
$5,000
1 to 7 years
$200
$5
You'll receive a fixed rate from 4.89% p.a.
Finance a new or used car up to 5 years old. Large maximum borrowing amount up to $100,000 and terms up to 7 years.
SocietyOne Car Loan
From 5.95% (fixed)
5.95%
$5,000
2 to 5 years
from $0 to $595
$0
You'll receive a fixed rate between 5.95% p.a. and 17.49% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
Driva Car Loan
From 2.85% (fixed)
4.39%
$2,000
1 to 7 years
$295 (Varies by lender, starting from $295)
$10
You'll receive a fixed rate from 2.85% p.a.
Borrow up to $250,000 with loan terms from 1 to 7 years. Get access to a range of lenders.
Wisr Secured Car Loan
From 4.74% (fixed)
5.01%
$5,000
3 to 7 years
$195 for refinance and dealer sale ($245 for private sale)
$0
You'll receive a personalised interest rate from 4.74% p.a. to 16.01% p.a. based on your risk profile
A flexible car loan from $5,000 - $63,000 with personalised rates and rewards for strong credit customers.

⭐Special Offer: Wisr's standard establishment fee $605 will be reduced to $195 for applications submitted through Finder. T&Cs apply.
OurMoneyMarket Car Loan
From 5.35% (fixed)
5.65%
$2,001
1 to 7 years
$250
$0
You'll receive a fixed interest rate from 5.35% p.a. to 14.99% p.a. based on your risk profile.
Borrow between $2,001 and $75,000 to finance a new or used car up to 7 years.
Latitude Personal Loan (Secured)
From 5.99% (fixed)
7.26%
$3,000
1 to 7 years
Loans under $5000 - $140
$13
You'll receive a fixed rate between 5.99% p.a. and 21.99% p.a. based on your risk profile
Lock in a competitive fixed rate when you offer security. Loan can be used for any purpose and repayments are flexible. You can check your interest rate before applying with no impact to your credit score.
Beyond Bank Low Rate Car Loan
4.69% (fixed)
5.01%
$25,000
1 to 7 years
$175
$0
You'll receive a fixed rate of 4.69% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.
loading

Compare up to 4 providers

$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Service Fee Monthly Repayment
Loans.com.au - New and Dealer Used Car Loan
From 4.67% (fixed)
5.22%
$5,000
3 to 5 years
$400
$0
You'll receive a fixed rate from 4.67% p.a. based on your risk profile
Finance a new car and benefit from features such as fast approval, no ongoing fees and an optional balloon payment. Settle the loan before 30 November 2021 and enter the draw to win a $1,000 fuel gift voucher. T&Cs apply.
Plenti Car Loan
From 4.89% (fixed)
5.44%
$10,001
3 to 7 years
from $249 to $799
$0
You'll receive a fixed rate from 4.89% p.a.
Borrow up to $100,000 with a Plenti Car Loan and benefit from no early repayment or exit fees.
Credit Concierge Car Loan
From 2.99% (fixed)
4.07%
$10,000
1 to 7 years
$350
$8.50
You'll receive a fixed rate of 2.99% p.a. with a comparison rate of 4.07% p.a.
Get access to over 20 providers to fund a new or used car.
MoneyForJam Car Loan
From 2.85% (fixed)
4.85%
$4,500
1 to 7 years
From $1 to $990
$25
You'll receive a fixed rate from 2.85% p.a. based on your risk profile
Borrow between $4,500 and $120,000 with loan terms up to 7 years to finance a new or used car. Get access to more than 40 providers.
Heritage Bank Car Loan
4.89% (fixed)
5.53%
$5,000
1 to 7 years
$200
$5
You'll receive a fixed rate from 4.89% p.a.
Finance a new or used car up to 5 years old. Large maximum borrowing amount up to $100,000 and terms up to 7 years.
NRMA Used Car Loan
From 6.24% (fixed)
6.94%
$5,000
1 to 7 years
$499
$0
You'll receive a fixed rate from 6.24% p.a.
Finance a used car with NRMA and benefit from a fixed rate term and no monthly fees. Pre-approval available within 5 business hours.
Wisr Secured Car Loan
From 4.74% (fixed)
5.01%
$5,000
3 to 7 years
$195 for refinance and dealer sale ($245 for private sale)
$0
You'll receive a personalised interest rate from 4.74% p.a. to 16.01% p.a. based on your risk profile
A flexible car loan from $5,000 - $63,000 with personalised rates and rewards for strong credit customers.

⭐Special Offer: Wisr's standard establishment fee $605 will be reduced to $195 for applications submitted through Finder. T&Cs apply.
OurMoneyMarket Car Loan
From 5.35% (fixed)
5.65%
$2,001
1 to 7 years
$250
$0
You'll receive a fixed interest rate from 5.35% p.a. to 14.99% p.a. based on your risk profile.
Borrow between $2,001 and $75,000 to finance a new or used car up to 7 years.
Great Southern Bank Fixed Rate Car Loan
6.79% (fixed)
7.16%
$5,000
1 to 7 years
$265 ($175 Establishment Fee + $90 Security Administration Fee)
$0
You'll receive a fixed rate of 6.79% p.a.
A secured loan with a high maximum borrowing amount up to $100,000. Redraw facility and no monthly fees.
Latitude Personal Loan (Secured)
From 5.99% (fixed)
7.26%
$3,000
1 to 7 years
Loans under $5000 - $140
$13
You'll receive a fixed rate between 5.99% p.a. and 21.99% p.a. based on your risk profile
Lock in a competitive fixed rate when you offer security. Loan can be used for any purpose and repayments are flexible. You can check your interest rate before applying with no impact to your credit score.
Beyond Bank Low Rate Car Loan
4.69% (fixed)
5.01%
$25,000
1 to 7 years
$175
$0
You'll receive a fixed rate of 4.69% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.
loading

Compare up to 4 providers

Picture: Shutterstock

More guides on Finder

Car Loan Offers

Important Information*
Logo for IMB New Car Loan
IMB New Car Loan

You'll receive a fixed rate of 4.88% p.a.
A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one up to two years old.

Logo for Beyond Bank Low Rate Car Loan "Special Offer"
Beyond Bank Low Rate Car Loan "Special Offer"

You'll receive a fixed rate of 4.69% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.

Logo for RACV New Car Loans
RACV New Car Loans

You'll receive a fixed rate from 4.99% p.a.
A larger loan of $5,000 or more to help you buy a new or used car. 5-hour pre approval available and no ongoing fees.

Logo for NRMA New Car Loan
NRMA New Car Loan

You'll receive a fixed rate of 4.99% p.a.
Purchase a new or used car up to 2 years old and benefit from a fixed rate and no monthly fees. Pre-approval available within 5 business hours.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Go to site