Choosing between a new and a used car often comes down to monthly repayments. But the smarter decision compares total cost and flexibility. New cars might secure lower rates, longer terms and manufacturer support, while used vehicles can save heavily on depreciation despite slightly higher rates. The goal is to model both paths with realistic on‑roads, fees and, if relevant, balloons.
Interest rates and terms
Lenders price used cars higher due to age, mileage and collateral risk. Secured new‑car loans may have promotional rates and longer terms. However, chasing the longest term to lower repayments increases total interest. Use our calculator to visualise the interest vs principal composition and to test shorter terms.
Depreciation and warranties
New cars depreciate fastest in the first years but offer full warranty and often capped‑price servicing. A near‑new used car avoids the steepest depreciation while retaining warranty coverage. If buying older, budget for higher maintenance and potential downtime.
Security and LVR
Older vehicles and private sales can reduce the lender’s willingness to take the car as security, pushing you toward personal loans with different pricing. A sensible deposit improves the loan‑to‑value ratio and can unlock better pricing for both new and used options.
Balloon considerations
Balloons reduce regular repayments but shift cost to the end. They can work for disciplined buyers who plan to refinance or clear the lump sum from savings or sale proceeds. Large balloons on rapidly depreciating cars can be risky—model scenarios where resale is lower than expected.
Insurance and running costs
New cars often cost more to insure comprehensively; used vehicles may have higher maintenance. Factor rego, CTP and any LCT for high‑value cars. Our on‑roads estimate helps you compare drive‑away cost more realistically.
Practical steps
- Compare both scenarios using comparison rates and total interest, not just monthly repayment.
- Adjust term and deposit to meet budget while keeping total interest acceptable.
- For used cars, obtain pre‑purchase inspections and confirm service history.
- Check insurance quotes for each model and age to avoid bill shock.
Bottom line
New vs used is ultimately a trade‑off between certainty and depreciation vs price and flexibility. Model both paths and pick the one where your budget, risk tolerance and timeline align—not just the lowest fortnightly figure on paper.