Should You Buy a Used or New Car?

There are many pros and cons to owning a new car – certainly the way things are changing with the environmental concerns it’s likely more and more people will invest in a new car in order to get something electrical and climate friendly – but it does leave people asking questions such as what is gap insurance? or “how can I finance such a vehicle?

Plus sides of purchasing a 2nd hand car is that you own it outright, you generally purchase the vehicle at the fair market rate on the day and when you go to sell it and if you make a wise purchase with a good resale value, you can trade it in towards your next purchase.

The downside of owning outright is that you are responsible for all the upkeep and repairs on the vehicle and as the vehicle ages this could amount to rather a lot over the years – depending on how much of a thrashing the car gets.   If you choose well – you may get a great run around that lasts for many years without extensive maintenace or you may end up with a lemon that you are constantly sinking money into!

Therefore for some people with good credit approval – getting a car through hire purchase is a much better way to own a vehicle.  Your monthly payment may be a bit higher than it would be if you just bought an old banger as you will be paying for the “included maintenance” as well as the ability to pop your vehicle back to the dealer after two years and get a brand new snazzy car.

The main downside to this is if your vehicle is written off before the next trade in – let’s say the hire purchase on a brand new car of £20k lasts you for a few years but you write off the car at a current market value of 8k.  You would still be liable for the £12k shortfall as the car won’t be available to take back to the dealer.  This is where a good gap insurance would come in very useful as it would pay out for any gaps incurred up on accident of your car.

It’s important for the future of our planet that we move towards electrical vehicles and for many, due to the maintenance requirements it would make more sense to take a hire purchase option with the gap insurance to cover any shortfall.