Why a new car could save you money and the best auto loans in April
It’s no secret that used cars are a hot commodity in the auto credit market today, which is good news for sellers but less than ideal for buyers.
According to the last Datium Insights-Moody’s Analytics price index for March, used vehicle wholesale prices are 37% higher than the pre-pandemic record level set in February 2020.
Prices rose 5 percent in the first quarter of the year. While this is the slowest quarterly increase in the past four quarters, it is still faster quarterly growth than previous figures recorded over the past decade.
Source: Datium Insights, Moody’s Analytics
Several factors are influencing this increase, including the limited supply of new vehicles, which remains a problem in Australia. It is now “common” to order a new vehicle and wait for its delivery.
Before getting into the driver’s seat, it may be worth exploring the pros and cons of affordability in used and new cars. This can help you better choose the right type of auto loan for your financial situation in April.
Is a new car more affordable than a used car right now?
The short answer is, it depends on the buyer, their personal financial situation, and the car they are interested in.
But there is a range of factors to consider when evaluating the most affordable type of vehicle, including:
- guarantee – usually offered with new cars only and can save the driver money by covering the costs of defects and problems before 100,000 km or in the first three years.
- Fuel consumption – generally, newer vehicles may offer more fuel efficient models.
- Service at a capped price – a newer vehicle may come with capped price service, an option that is generally not seen in the used car market.
- Depreciation – the biggest advantage of a used car is usually that the vehicle will be more affordable than if you bought the newer model from a dealership. A new car can start to lose value significantly in the first few years. But it depends on the make, model and used car market.
- Lack of supply – While timing and urgency are a factor in buying a car, new vehicles have faced supply issues in Australia. Global auto production has been stalled due to a shortage of a key component of modern automobiles. If you are looking to get away with a car as soon as possible, it may be worth opting for a used vehicle.
If timing is an issue or prices are still unaffordable, it might not be worth hurting your finances for a new vehicle. But before deciding that a new car is out of your price range, it can be helpful to assess the used car market against new vehicle prices at a dealership or online.
And, if you are considering taking out an auto loan to finance your purchase and only a few hundred or thousand dollars separate you from a new vehicle, it may be worth calculating loan repayments on both used and new models. If you can get a competitive new car loan, the repayment differences may be small enough to warrant the new purchase.
You might be wondering where to find a competitive car loan that does just that, and that’s where RateCity’s rankings come in.
We’ve worked hard for you, ranking some of the most competitive auto loans on the market with our real-time ratings.TM system.
Unlike other rating systems which rate their products once or twice a year, Real Time RatingsTM results are calculated in real time. This means you get the most up-to-date rating for your comparison. Each car loan is assigned a five-star rating, based on the cost and flexibility of the loan.
(Rankings are correct at time of posting. Please note that lenders may swap places on the list as interest rates and fees change and RateCity’s tracker reflects those movements.)