Aussies love the status that comes with a new car, despite the price tag, says ME Bank
Wednesday 10 October 2018
According to a recent survey by ME Bank, we’re a nation who loves a bit of luxury when it comes to our wheels.
In fact, a survey of 1,000 car owners revealed that 53% of Aussie car owners purchased a new car, compared to the 47% who purchased a second hand car.
So why are Aussies coughing up a bundle for a brand new car? Well according to ME Money Expert, Matthew Read, it’s to do with status.
“Status is one of the key reasons we’re obsessed with new cars: 51% of new car buyers said ‘the car they drive says something about them so they prefer to purchase new cars’, rising to 64% among Gen Y,” he said.
“Almost half (47%) of Gen Zs even agreed they ‘would feel embarrassed driving a used car’.”
But any motorhead knows that in order to pick up a new set of wheels, you’re going to have to get past the big price tag first.
Those who bought a new car were recorded to fork out $20,000 more than used cars buyers, with the average amount spent on a new car reaching a whopping $34,000.
To put things into perspective, we pulled out our car loan repayment calculator to find out what this might look like for the everyday Aussie.
If you were thinking of treating yourself to a new car and planned to borrow $34,000 to do it on the average new car loan rate of 7.55% to be repaid over 5 years, you’d have to fork out a massive $6,926 in interest.
On the other hand if you decided to keep it humble by buying a second hand car, only borrowing $14,000 with the average used car loan rate of 8.10%, over 5 years, you’d pay $3,072, a difference of $3,854.
While 33% of car owners overall took out finance to buy a new car, 41% of those borrowed money through a personal loan.
A massive 59% of Gen Z also admitted to taking out a loan to buy a new car.
Read also believes that the rising popularity of new cars is not only to do with status, but a misunderstanding between the costs of running a new car compared to a used car.
“Around 61% of car owners agreed with the statement ‘used cars will cost you more in the long run (e.g. maintenance, servicing costs)’, rising to 79% among Gen Z,” said Read.
“Furthermore, 65% of respondents failed to identify depreciation as the biggest cost of owning a new car in the first three years, including 86% among Gen Z.”
Glamour vs reliable
But as younger Aussies continue to weave through the struggles and triumphs of owning a new car, it seems that others are dumping flashy for practical.
According to Gumtree’s Second Hand Economy Report, 29% of Aussies admitted to buying their car second hand.
“It might not seem as glamorous as a new car, but there are thousands of well-maintained and serviced used cars available. If you do your research and negotiate well, buying a preloved vehicle could save you a lot of money,” said Read.
With saving some cash and doing your research in mind, here are are a few things to keep in mind the next time you go used car shopping:
- Know the car's history - Before you head off to see the car in person, obtain a Car Record Report. This will give you access to the car’s valuation, odometer, engine info and safety ratings.
- Keep an eye on the numbers - One of the first things to know is the car’s reliability. So keep an eye out for cars with under 60,000KM on the odometer and a good service record.
- Do your own inspection - When you go to see the car in person, it’s a good idea to take someone who knows what they’re doing with you to help inspect the vehicle. They can help you look out for things while on a test drive and inspect things like oil and lubrication levels, tires, lights and internal features.
And if you need a little help in funding your new or used set of wheels, you can head over to our car loan comparison tool.