Should I buy a new or used car?

Whether you should buy a new or used car depends on your budget, priorities and how long you plan to keep it. New cars give you the latest tech, a full manufacturer's warranty and more car finance options, while used cars usually cost less and lose value more slowly. A nearly new car can offer a balance of both.

Once you've decided on the type of car you want, choosing between new, nearly new and used is one of the biggest decisions you'll make. In this guide, we'll compare the pros and cons of each option, explain how they affect your budget and help you work out which is the best fit for you.

Should I buy a new, nearly new or used car?

You’ve possibly already got a make and model in mind when shopping for a car, but should you buy new, nearly new, or used? The good news is that there’s no right or wrong choice, but there are lots of things to consider.

Let’s start with some quick definitions:

New car

A new car is a brand-new model that has never been owned by anyone else. You get to choose the spec and colour, and you’ll be the first registered owner of the car.  When you order a new car, you usually have to wait for it to be built to your specifications – you might not be able to collect it for weeks, or even months.

Nearly new

The definition of a nearly new car varies, but it generally refers to a car that’s up to a year old and has less than 5,000 miles on the clock. If you buy a nearly-new car, you’ll become the second (or, rarely, third) registered owner. A nearly new car will be in stock, so if you buy it you’ll be able to drive it home in a matter of days, or possibly immediately.

Used car

A used car will have had at least one previous owner, and could have had loads! While some used cars are nearly new, others will have covered hundreds of thousands of miles.

At a glance, what are the differences between the options?

Buying a new car

There’s something special about a brand-new car, whether it’s that fresh-out-of-the-box smell, the perfectly clean upholstery or the flawless paintwork. Plus, you get to choose the exact make, model, colour and spec, as well as any optional extras.

A new car represents the manufacturer’s best work so far: their most ergonomic design, the most comprehensive safety features, the cleanest emissions, and the latest tech. And it’ll be covered by a full manufacturer warranty. While the average is 3 years or 60,000 miles of cover (whichever comes first), some brands offer warranties that run to 5, 7 or even 10 years and up to 100,000 miles.

If you buy a brand-new car, you have lots of ways to pay for it. Most are available through a range of hire purchase (HP) or personal contract purchase (PCP) packages, and many car brands offer new-car deals such as a deposit contribution – essentially giving you money off the list price. Leasing is another way to pay for a new car, although this is a long-term rental agreement rather than a form of ownership.

If you do choose a brand-new car, you’ll pay a premium for the privilege, because unless you’re buying something rare or collectable it will always cost more than a nearly new or used one. And bear in mind that your car is likely to lose its value more quickly too, because cars generally depreciate quickest in their first 12 months on the road.

New car pros and cons

Buying a new car is exciting, but there are some key pros and cons to be aware of:

Pros

• You can customise the car to suit your exact specification

• You won’t have to worry about getting an MOT for the first three years

• You might benefit from better fuel efficiency

• Your car will have the latest safety and tech features

• It’ll have a full manufacturer’s warranty

• You won’t need to worry about any hidden vehicle history

• You’re likely to have lots of finance options

• You could get access to manufacturer special offers or deals

Cons

• You’ll likely pay a premium for buying a brand-new car

• You might have to pay a higher insurance premium

• You may have to wait a while for the car to be ready

• Your car is likely to depreciate much faster than a used car

Buying a used car

If you’re considering buying a used car, you’re not alone; approximately eight million used cars are sold in the UK every year. And that’s for good reason. Used cars tend to be cheaper and easier to get if you need new wheels quickly. They generally lose value more slowly because the fastest years of depreciation are behind them, too.

The price you pay for this budget-friendly option is uncertainty. Although some used cars are comparatively new and may have some of their original manufacturer warranty left, others may come with little or no reassurance.

Used car pros and cons

Buying a used car can make a lot of financial sense, but there are some pros and cons to consider:

Pros

• You might bag a bargain and pay a lot less than you would for a brand-new car

• You’ll likely have a lot of makes and models to choose from

• You could miss out on the fastest years of depreciation

• You could enjoy peace of mind with an extended warranty

• You don’t have to wait for the car to be delivered from the factory

Cons

• There’s a risk that the car hasn’t been properly maintained

• You might not have access to its full history

• The car might not have any warranty cover

• They might not have the latest safety or tech features

• You might have limited finance options

Buying a nearly new car

A nearly new car gives you most of the pluses of a brand-new one, but is likely to cost less. How much could you save? Expect a nearly new car to save you up to 25% on the list price of a brand-new model. On the downside, you won’t be able to choose the exact spec of the car, and you won’t be the first owner.

A nearly new car will have the majority of its manufacturer warranty intact. Depending on the brand, a year-old car could have anything between two and nine years of cover remaining. In many cases, a nearly new car will have the latest tech, although any that have been replaced by a newer model will have slightly less up-to-date features. Many nearly new cars will have been used as dealer demonstration cars or pre-registered by dealers (bought to meet their sales targets), so they should be in excellent condition, with very little wear and tear.

Nearly new cars are available with a similar range of finance options to new ones, although not all manufacturer incentives are likely to be on offer.

Pros

You could save up to 25% compared with a brand-new model
You avoid the fastest rate of the car’s depreciation
You’ll still get a car with up-to-date (if not the latest) tech and features
The car should have minimal wear and tear and very low mileage
You’ll benefit from the majority of the manufacturer warranty

Cons

• You won’t be the first name on the car’s registration document

• You won’t be able to choose the exact specification

• You’ll have a more limited pool of options to choose from

• You’ll miss out on that new-car feeling

• You might not have as many finance options as a new car

Which option is right for me?

There’s no right or wrong answer when it comes to choosing your car, or how you buy it.

If you’ve got a strict budget, a used car could be the best way to spend your money. This might also be the right choice for you if your credit score could do with some TLC and you can only borrow a limited amount through car finance.

On the other hand, if you can afford to splash the cash and want to tailor your new car to your exact specifications, a brand-new model might be a good fit. You could choose your favourite colour and benefit from the latest safety features, while enjoying the peace of mind that comes with knowing you’re covered by a full manufacturer’s warranty.

Nearly new cars occupy the middle ground. They can have less impact on your bank balance but still come with a lot of those new features that make car enthusiasts’ hearts beat a little faster. You won’t have the luxury of choosing the exact specification, and you won’t get that new-car smell, but the cost savings could be worth the sacrifice.

Disclaimer: This blog post is for general information purposes only and does not constitute legal or financial advice. Your rights and options will depend on your individual circumstances and the terms of your agreement.