New or used cars: What are your options?

couple looking at buying a new car

 Last updated: 15 May 2024 |  Estimated read time: 5 Minutes

When deciding to purchase a car, you will need to decide whether you are looking for a new or used vehicle. Doing your research can help you work out which car meets your needs.

When it comes to buying a car, it’s easy to get excited at the thought of owning the latest model with new features or leather seats. However, if you’re considering an older model then a used car might work for you. Here are some tips to help you decide. 

Buying a new car 

It has to be said, there’s nothing quite like the feeling of owning a brand new car –not to mention the new car smell. 

With a new vehicle, you can choose a model with the latest features, obtain a new car manufacturer warranty that typically lasts between three and five years and, depending on the dealer, you could access capped-price servicing. 

You also get to choose which optional features you want on your vehicle, such as the trim, colour, wheel upgrades and more. In short, you can choose the features you want, and the new car warranty can also provide you peace of mind. 

New cars tend to break down less than used cars, and if serviced according to the manufacturer's requirements, should remain mechanically sound. 

Brand new cars can lose a significant percentage of their value due to depreciation within the first few years of ownership. Depreciation rates can vary depending on the make and model of the vehicle. 

Buying a used car 

You might also consider getting a car loan to buy a used second-hand car.

If the car is only a couple of years old, it might still have a valid new car manufacturer warranty and also access to capped-priced servicing. 

When choosing a used car you’ll have to take the car as is. There are usually many used cars available for sale in the market, so take the time to look for a car that suits your needs and budget.

You can choose to purchase a used car from a licenced car dealer, through private sale or via an auction. 


Buying a car from a private seller 

You may get a good deal buying through a private seller but other than making sure you are giving the car a thorough check, it's also important to test drive the vehicle, and get the vehicle assessed by a professional mechanical inspector. Private sellers are usually more eager to sell their vehicles as soon as possible and are typically more flexible on price during negotiation, however buying privately requires relying on your own judgement.  

There are a few things you need to be wary of when buying a car privately. Here are some pre-purchase checks you should do: 

Check that the seller is the registered owner of the car  

To make sure that the seller is the actual owner of the car, ask to see the certificate of registration and check that the registered name and address matches the details on the seller’s driver’s licence.  

Make sure the car you are considering, is the one covered by the registration papers 

Make sure the number plate, vehicle identification number or VIN (a 17-character long alphanumerical combination that can be found under the bonnet, at the bottom of the windscreen, or along the doors) and engine number matches what it says on the certificate of registration. If the car does not have any registration on it, ask to see proof that the car has been through a safety inspection. Each state has its own laws pertaining to vehicle inspection, for more information check with your state’s motoring organisation, fair trading or consumer affairs department. 

Check the registration is valid 

Confirm the car’s registration by verifying its license plate and VIN with your state’s government traffic authority or vehicle registry office. 

Do a PPSR check

Make sure that the car you are looking at doesn't have a third party registered security interest by doing a Personal Property Securities Register (PPSR) check. If the seller has done a PPSR check beforehand and is able to provide a certificate of the search, you can use the search number on it to retrieve the original search results.


Buying a car from a dealership 

Buying a car through licensed dealers may be more expensive than from a private seller but it can offer you greater protection. 

Car dealers must only sell cars that have no money owing. All cars sold from a licensed dealer should include a car description form which has important information such as the dealer’s name, cash price of the car, VIN and engine number, mileage and warranty details where applicable. 

You should check that the information on the form reflects the actual details of the dealer and car, just as you would with a private seller’s certificate of registration. It’s also a good idea to do an inspection on the car before you buy, especially if it doesn’t come with a warranty. 

Here's what you can get when you purchase a car from a licensed dealer: 

  • You'll receive a statutory warranty that guarantees the car is mechanically sound, and that most mechanical problems will be resolved within a certain period of time. Depending on the state you live in, the warranty and its conditions will vary, but largely depends how old the car is, its existing mileage and selling price. 
  • Dealerships can provide specialist advice about the right kind of car to suit your needs and budget. 
  • The dealership handles all the paperwork, including transfer of ownership to checking its registration, saving you a considerable amount of time. 
  • The dealership may be able to assist you with financing and insurance options. 
  • You could possibly trade in your old car with the new one. 
  • You are entitled to a cooling off period should you change your mind. Note that there is no cooling off period for new vehicles. Cooling off period varies depending on the state you live in. Check with your licensed car dealership before signing on a contract.  

Buying a car at Auction 

Cars purchased at auction are not covered by a dealer guarantee and normally you can’t take it for a test drive. You should arrange an independent vehicle inspection prior to the day of auction.

Need a new or used car? We're here to help.

There are many factors to consider when buying a car and deciding which vehicle suits your needs. Whether you choose a new or used car, if you need to finance your car purchase, choosing the loan that is right for you is also important.

Our job is to make it easy to get your hands on the wheel of your new choice of car. So, we've made it simple with our range of car loan options. We provide both secured and unsecured car loans.

Information provided is factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.

All applications are subject to credit assessment, eligibility criteria and lending limits. Terms, conditions, fees and charges apply. 

The results of the borrowing power calculator are based on information you have provided and is to be used as a guide only. The output of the calculator is subject to the assumptions provided in the calculator (see 'about this calculator') and are subject to change. It does not constitute a quote, pre-qualification, approval for credit or an offer for credit and you should not enter commitments based on it. The interest rates do not reflect true interest rates and the formula used for the purpose of calculating estimated borrowing power is based on the assumption that interest rates remain constant for the chosen loan term. Your borrowing power amount will be different if a full application is submitted and we complete responsible lending assessment. The results in the calculator do not take into account loan setup or establishment fees nor government, statutory or lenders fees, which may be applicable from time to time. Calculator by Widgetworks.

Pepper Money Personal Loans is a brand of Pepper Money Limited. Credit is provided by Now Finance Group Pty Ltd, Australian Credit Licence Number 425142 as agent for NF Finco 2 Pty Limited ACN 164 213 030. Personal information for Pepper Money Personal Loans is collected, used and disclosed in accordance with Pepper’s Privacy Policy & the credit provider’s Privacy Policy.

Pepper Money Limited ABN 55 094 317 665; AFSL 286655; Australian Credit Licence 286655 (“Pepper”). All rights reserved. Pepper is the servicer of home loans provided by Pepper Finance Corporation Limited ABN 51 094 317 647. Pepper Asset Finance Pty Limited ACN 165 183 317 Australian Credit Licence 458899 is the credit provider for asset finance loans.

Pepper and the Pepper Money logo are registered trademarks of Pepper Group Assets (Australia) Pty Limited and are used under licence.

Get in touch with a Lending Specialist

Tell us about your situation. The more we learn, the better we can help.