girl smiling in car because she bought a new car

Could buying a new car save you money?

Second-hand cars have long been considered the cheaper option. And when we consider up front out of pocket car costs, that could be considered as true.

But if you look at the total life span of owning your vehicle, buying brand new might not be as expensive as you think. Let's crunch some of the numbers.

How much does a new car cost?

According to a recent Canstar Blue survey of new car owners, the average cost of a new car in Australia is $37,362. This covers a wide range from small, budget friendly cars ($26,454 average) to new sedans ($36,075 average) and SUVs ($39,857 average).

How much does a used car cost?

The cost of a used car has softened over the past two years after peaking in 2022 due to supply issues. According to general market trends, the average cost of a used car could set you back between $33,000 and $35,000, down 13 per cent from its post-covid surge, but still about 51 per cent higher than pre-pandemic levels.

When you consider the menial difference in potential upfront costs of a new vs used car, it might help to unpack a little further, to see just how far your money can take you.

New car warranty

Want wheels for less and peace of mind? Then buying new is definitely for you. New cars bought from the dealerships come with fewer surprises and with warranty included – the average is about three years, but some warranties go past the loan term.

This generally means defects within the warranty period will be covered by the manufacturer, so you won’t have to shell out your hard-earned savings.

Average car maintenace costs for new cars

Imagine buying a used car for an absolute steal, only to discover soon after it needs a new gearbox. The service log of a car never tells the full story, so it’s hard to know how well a seller really looked after their vehicle. 

When purchasing a new car, not only are you protected by its warranty, but you also often have capped price servicing for the duration of your loan or warranty.

According to reports from Car Expert, average capped price servicing costs for new cars depend on the price range of the actual car:

Budget-friendly models

For brands like MG, GWM Haval, and certain makes from Hyundai, Suzuki and Kia, you're looking at an average of $358 per year over five years.

Mid-range models

For mid-range brands like your Mazdas, Toyotas and even some utility vehicles from Isuzu, you could be paying an average cost of $408 per year over five years.

Premium models

For your top of the range makes of car from brands like Volkswagen, Subaru, or certain top-tier Kia models, you're going to be out of pocket an average of $824 per year for servicing.

Depending on the manufacturer, capped servicing generally applies to scheduled services every 12 months or 10,000-15,000km, and doesn't generally include other wear-and-tear items like brake pads, batteries or new windscreen wipers.

Average car maintenace costs for used cars

For used cars, a report from Madman Motors breaks down service costs depending on their level of maintenance required:

  • Minor service: oil and filter changes, basic inspections, and fluid top-ups. $150-250.
  • Standard service: more comprehensive checks and replacements. $250-400.
  • Major service: extensive inspections, part replacements, and system dianostics. $400-800 or more.

There are some factors that could influence these numbers, like the vehicle make and model, how old the car is and how many kilometres it has already done. 

Fuel efficiency of a new car

With petrol prices tipped to become ever-more expensive over coming years, buying a fuel-efficient vehicle isn’t just good for the planet – it’s good for your wallet as well.

New vehicles are always raising the bar, so research how much petrol your favourite models will consume over 100km. Or perhaps you want to ditch the fuel pump altogether and go for an electric vehicle?

Depreciation and insurance value of a new car

We often hear that brand new wheels will cost us more in car insurance, but if you have a good driving history, and look for a model with an excellent safety rating and low depreciation over time, then you could be in for some savings. For example, a new Nissan GT-R loses $60,574 of its value after 5 years, however a new Subaru Impreza loses only $10,569 in depreciation after 5 years. This is due to its popularity (which makes its parts easier to replace) and top-notch safety technology (such as blindspot monitoring). So not only will certain new models have better resale value (Toyotas and Hondas usually do well), their safety features cut insurance premiums, too. 

So if you’re shopping for a new set of wheels, don’t automatically assume used cars are more wallet-friendly. Do the research and find the savings-savvy model that’s right for you. And once you have new keys in hand, be sure to check out Virgin Money Car Insurance to keep you covered on the road.

Keep your eyes on the road with Virgin Money car insurance

Take a look at our car insurance options or request a quote to find the coverage that's right for you and your wheels. 

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