Why buying a new car could be cheaper than used

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It used to be simple: new cars depreciate faster than used ones, so if you were being careful with your pennies you’d only buy what salesmen (and only salesmen) call ‘pre-loved’ vehicles. But things have changed. Research carried out by car-buying comparison service carwow.co.uk suggests the extra money and lower interest rates car companies offer to encourage customers to buy brand-new can actually make buying a new car a wiser choice than getting car with a year’s worth of use under its tyres.

 

I asked Matt Lewis from CarWow to walk me through the research...

Real-life calculations

Matt gave a worked example, outlined in the table below: “The SEAT Leon is nothing unusual – it’s a top-level FR trim car with a punchy 184PS 2.0-litre diesel engine. The new car is £4,395 more expensive than the approved used car in the right-hand column. “However, when we compare prices offered by dealers, who have given customers upfront offers online with no haggling, we see the new price drop to £20,854, closing the gap by a significant amount. “But if you buy that new car you’ll likely be offered SEAT’s 0% APR finance package. The cheaper model with 5,000 miles on the clock, meanwhile, will only be eligible for more expensive finance, which includes various fees and higher monthly repayments. “So after three years you’ll have paid almost £2,000 more for the privilege of not having been the first owner.”

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Round of Golf?

The second example is one that’ll get any petrolhead’s heart racing: the new 300PS VW Golf R. This is a seriously quick family car that’ll race to 60mph faster than a Porsche Cayman. Again, Matt talks through the numbers… “Our figures show that purchasing a new Golf R new can drop the price £3,000 below that of a used one. But it gets better. “Thanks to Volkswagen’s PCP deal you’ll still be able to own the car for just £35,609 after three years of low monthly payments. That sum does include a balloon payment of £18,375 if you want to buy it outright, but you’re still better off to the tune of nearly £8,000 over the used car.” 

 

VWGOLFOldNew1

Think before you buy

So the core message here is that it’s well worth doing a bit of research before you make your decision about which car to buy, including the overall cost of finance.

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