Currently own an older Car and wondering if it is worth investing in a new car? Even with this decision there is another decision of whether to buy a new or second hand model.

With both of these decisions there is a question of which is more affordable – old cars or new cars?

Some argue that it is best to invest in a new one as they require less maintenance. While others consider buying a new one an expensive affair.

So what should you choose, an old car or new? Each option has its pros and cons, so let’s get into it.

Old Cars

To get a clear idea of whether keeping your old car or buying a second hand Vehicle is cost-efficient or not, it is crucial to understand a few things.

From the purchase price and cost of the insurance policy to general maintenance, it all matters on how affordable it is.

Lower Purchase Price

Most old cars will cost much less to buy than a new car. The fact is that once a new vehicle hits the road, it starts to depreciate.

If it only has some minor issues that can be repaired, it will be more affordable than buying a new one.

Lower Insurance Premiums

Insurance premiums for older cars tend to be low compared to new ones. This is because the cost to replace the vehicle will be lower than newer more expensive cars.

For this reason, the insurance premiums are cheaper.

Increased Maintenance

As vehicles get older their parts wear out and more of the critical components will need replacement.

The good news is that these parts are usually lower in cost than the equivalent for brand new models. Also you can even find second hand parts from auto wreckers.

Mechanics are also more experienced with older models, unlike when it comes to new ones that use more advanced technology. This means common problems may be fixed sooner.

But overall you are more likely to be spending more time at the mechanic with older cars.

New Cars

If you have the money to invest in a new car there are many benefits. Increased reliability, the latest safety and technology all create a more pleasant driving experience. But how affordable is it?

  Higher Purchase Price

In most cases, it will be necessary to borrow money to finance a brand new car. By doing this you will pay the loan off in installments, so you will not require a huge upfront cost.

However, the overall price will be much higher than buying a second hand car. Also with a loan you will be adding interest to the final amount, which can add a considerable amount more.

Less Frequent Maintenance

Maintenance costs for newer cars tend to be less expensive.

This is due to the fact that major issues will be covered by warranty, they have increased reliability and many dealers offer capped price servicing.

Overall you should not be spending much time at the mechanics with newer cars, which can again be very valuable to you.

Higher Insurance Premiums

Insurance for new cars is generally expensive. It can be double the amount for old ones. For example, if old car insurance is 600 dollars, a new one of the same model could be 1,200 dollars.

The total expenses over time are high although they go down as the car depreciates.

The Decision

As you can see there are a few things to consider when it comes to the affordability of a motor vehicle. Both old cars and new ones have the pros and cons when it comes to pricing.

Here are a few more points to consider.

Running Costs

Another point to consider is the day to day running costs of each vehicle. Of course all things being equal, in terms of engine size and capacity, newer cars tend to be more fuel efficient.

This is due to the fact that the build of the whole vehicle uses materials that are lighter, and also the engine components are more efficient in general.

This makes a big difference if you use your car more frequently as you will be refuelling more often anyways. So to have a car that uses less petrol, your savings will quickly add up.

Depreciation

All cars will depreciate as time goes by. New ones tend to depreciate at a very high rate, unlike the old ones.

For the first year, a new one can depreciate by up to 30%, and by the time it is driven for five years, it is already half its price. On the other hand, an old one depreciates slowly.

Depreciation is something worth considering if you intend to resell the car. That is unless you drive an old car into the ground. At which point you will need to request unwanted vehicle collection.

Financing

Since new cars are more expensive than old ones, the initial financing is high. The down payment for a new one will be higher than that of an old one.

The interest in the former will also be high. In this case, financing for an old one will be more cost-effective.

  Conclusion

When it comes to deciding the most affordable option for old and new cars, there are multiple factors to keep in mind.

The initial purchase price, running costs, maintenance, depreciation, and insurance premiums are just some of these factors.

When it comes to financing, you need to consider whether you are comfortable with the down payment and the interest rate.

When all these are taken into account, used cars tend to be more affordable for buyers who are on a budget. If money is not a problem, one can opt for a new one that runs without issues although it depreciates fast.