Is it cheaper to buy a new car than maintain an old one?
With the average cost of a new car averaging around £30,000 – it would seem that it’s almost always going to be cheaper to keep an older car running than to buy a new one. Cars are a lot more reliable these days than they ever were before. Some can go tens of thousands of miles before ever needing any major work doing to them. Some may even exceed 200,000 miles in their life span.
All cars need regular checks and the annual MOT, but even elements such as brake pads and tires last a lot longer today than ever before. Some people may never buy a brand-new car in their lifetime, and for many it may not make financial sense to them or ever be an option.
Car experts state that when the repair costs approach 50% of the car’s estimated resale value, it’s probably time to go car shopping. Let’s take a look at the pros and cons of upgrading:
Pros of buying a new car:
• It’s a new car! It’s shiny, clean and whizzy and your friends and family are impressed.
• It is likely to be more fuel-efficient than an older car so you will save money on the forecourts.
• The car should be under warranty for a few years which will cover any minor repairs needed.
• If you choose to buy a hybrid, then this will cut down on your fuel costs and decrease your impact on the environment.
• New cars often have lower emissions which may lower the amount of road tax you pay too.
• A new car does not require an MOT for the first three years.
• Around 80% of new cars are bought on finance which enables you to pay a deposit and then pay off the car in monthly instalments, plus interest.
• If you use your car for work, then a new model will ensure you maintain the image you want to portray and may help you win more business in the future.
Cons of buying a new car:
• It’s a new car, ouch! The average salary in the UK is £35,423, according to the Office for National Statistics. Therefore, for most people, it will almost always be cheaper initially to fix an older car than buy a new one.
• Buying a new car requires cash upfront which you will need to have in your savings or take out as a loan. If taking out a loan, you will need to make sure you haven’t overstretched yourself and get into debt.
• If you do buy a brand-new vehicle, you will be aware that as soon as it’s driven off the forecourt, it has already dropped in value. Vehicles can lose up to 60% of their value in the first three years of ownership.
• Your insurance and tax will be higher on a new car.
• If anything goes seriously wrong with the car, it could cost more to repair.
• Building a new car uses up resources and energy and getting rid of an old car also takes energy and parts that cannot be recycled will end up in a landfill. If you are concerned about your impact on the environment, then this may be a consideration.
• A new car may require monthly loan payments, whereas you are likely to own a car you have had for a long time, outright.
Whether you’re considering upgrading to a new vehicle or holding on to a much-loved motor, it’s worth looking at the overall running costs for each.
In the short term, the lower costs of running a new car would offset the initial cost of buying it. And as mentioned above, you’ve got a shiny, clean and whizzy new set of wheels!