New vs. Used Cars: Which is the Better Investment

When you're shopping for a car, one of the first - and biggest - decisions you'll make is whether to buy new or used. It's not just about shiny paint or the smell of a brand new interior. This choice comes down to what makes the most financial sense for your lifestyle, your budget and your long-term goals.

At AFS, we've helped thousands of Australians navigate this exact decision. Whether you're after something straight from the showroom or a reliable used vehicle, we believe the right finance partner makes the difference. Let's break down the pros and cons of new and used cars to help you decide which investment is right for you.

The Upfront Cost: A Clear Advantage for Used Cars

From the start, used cars are more budget-friendly. A brand-new car can drop in value by up to 20% in its first year alone. That’s a hit you take the moment you drive it off the lot. If you're looking to keep your initial costs low and avoid heavy depreciation, used is the clear winner.

At AFS, we offer competitive financing for both new and used vehicles. But with used cars, your loan amount is usually lower, which can mean more manageable repayments and less financial pressure over the life of the loan.

You might even find a nearly-new model that’s only a couple of years old but priced significantly lower than its original value—with many of the same features and low kilometres. That’s smart buying.

Depreciation: Timing is Everything

Depreciation is one of the most overlooked costs in car ownership. New cars depreciate the fastest, especially in the first 2 to 3 years. If you're planning to upgrade vehicles frequently, this rapid drop in value could mean taking a financial hit when it comes time to trade in or sell.

Used cars, on the other hand, have already experienced their steepest drop in value. Their depreciation rate slows down over time, giving you a better chance of retaining more of your vehicle’s worth if you decide to sell in a few years.

If long-term value retention is part of your plan, purchasing used may offer a stronger return on your investment. At AFS, we help you consider these longer-term impacts when selecting your loan and vehicle type.

Warranties and Repairs: Peace of Mind vs. Potential Bills

New cars come with manufacturer warranties—usually covering at least three years—which can provide peace of mind and protection against unexpected repairs. There’s also the benefit of fewer mechanical issues early on, thanks to the vehicle being in top condition.

Used cars may not always come with a warranty, and their condition can vary depending on previous ownership. However, many dealerships now offer certified pre-owned vehicles that include extended warranties and thorough inspections.

It’s worth noting that today’s cars are built to last longer than ever. A five-year-old vehicle can still offer years of reliable service. At AFS, we factor in ongoing costs like servicing, repairs, and warranties when discussing finance options, so you can go in fully informed.

Financing Differences: Secured Loans and Interest Rates

Financing is a critical piece of the puzzle. New cars are often eligible for lower interest rates because they represent a lower risk to the lender—their value is higher and more stable. AFS frequently offers attractive secured loan options for new vehicles, helping keep your borrowing costs down.

However, while used car loans may carry slightly higher interest rates, they often involve a smaller principal amount. That means your monthly repayments may still be lower overall. If you're aiming to minimise debt or stick to a tight budget, a used car loan might be the better fit.

You can try our Loan Repayment Calculator to see what your repayments could look like for both new and used vehicles.

Tech, Safety, and Fuel Efficiency: New Has the Edge

There’s no denying that new cars offer the latest in technology—everything from adaptive cruise control to wireless smartphone connectivity and enhanced fuel efficiency. If cutting-edge features or the latest safety advancements matter to you, new could be the way to go.

That said, used cars—especially those just a few years old—still offer plenty of modern features. Many include touchscreen infotainment, reversing cameras, and advanced safety tech as standard. Unless you absolutely need the latest upgrades, you’ll likely find that a quality used car still meets your needs.

Resale Value: Looking Beyond the First Few Years

If you plan to keep your car long-term, resale value might not be top of mind. But if you think you'll want to trade it in or sell it within a few years, understanding resale dynamics is key.

As mentioned earlier, new cars lose a significant portion of their value early on. This means that even if you get a good deal upfront, your resale value could be significantly lower. Used cars, on the other hand, have already absorbed that hit and tend to retain more of their purchase price, relatively speaking.

At AFS, we encourage customers to look beyond just monthly repayments. We help you take into account total cost of ownership and potential resale value so you make a decision that works in the long run.

Lifestyle Considerations: What's Best for You?

If you drive long distances, plan to keep your vehicle for many years, and value new tech or warranty coverage, a new car might be worth the extra cost. If you're budget-conscious, open to compromise on features, and want to avoid the steepest depreciation, a used car could be your best investment.

AFS offers personalised finance solutions that align with your goals, whether you're after a brand-new model or a high-quality pre-owned one. With flexible terms, tailored options, and real conversations—not a one-size-fits-all approach—you’ll feel confident knowing your car loan was designed with you in mind.

Final Thoughts

So, which is the better investment: new or used? It depends on your priorities—budget, lifestyle, and long-term plans. What matters most is understanding your full financial picture and making a choice that aligns with it.

At AFS, we’ve been helping Australians like you for over 30 years, offering smart, flexible finance options across both new and used vehicles. Whether you're buying your first car or upgrading to something new, our team is here to guide you through it—step by step.

Ready to take the next step? Apply Now or try our Loan Calculator to start planning your journey.