Why buying a newer car works out cheaper in the long run

Are you one of the growing number of Brits who own older cars and are considering upgrading to a newer used model?

Whilst it may be tempting to simply carry on with your current model, the fact is that for each and every extra month that you own it, an older car will cost you more money. We take a look at the reasons you should upgrade your car to, and why it makes financial sense.

Are newer cars more fuel efficient?

These days, technology seems to evolve at an ever-increasing rate. Just think about what sort of mobile phones people were using in the early 2000s compared to the powerful smartphone devices we have now - the leap in technology is huge!

The same can be said for fuel efficiency. Every year, the technology available to make newer vehicles more fuel efficient advances, meaning that, generally, newer cars are much more fuel efficient than older cars.

In fact, you may not be aware just how fuel efficient some cars have become as technology has evolved over the past few years. According to AutoExpress, these are currently the UK’s most economical cars.

• Peugeot 208 1.6 BlueHDi 75 - 94.2mpg
• Peugeot 308 1.6 BlueHDi 120 - 91.1mpg
• Ford Fiesta 1.5 TDCi 85PS - 88.3mpg
• Nissan Micra 1.5 dCi 90 - 88.3mpg
• Peugeot 308 SW 1.6 BlueHDi 120 - 88.3mpg
• Renault Clio 1.5 dCi 90 ECO - 88.3mpg
• Vauxhall Astra 1.6 CDTi 110PS ecoFLEX - 85.6mpg
• Citroen C4 Cactus 1.6 BlueHDi 100 hp ETG - 83.1mpg
• Ford Focus 1.5 TDCi - 83.1mpg
• MINI One D hatch - 83.1mpg

Taking the Ford Fiesta 1.5 TDCi as an example, if you drive the UK average of 7,900 miles per year using fuel that costs 118p per litre, that equals a cost of just £561.27 per year for fuel.

Let’s compare that to a popular older car that we still see a lot of on the roads, the Honda Accord 1.8i (1999 - 2003) which has a fuel economy of just 30mpg. Driving an average of 7,900 miles per year in this car using fuel that costs 118p per litre will cost you £1652 per year, nearly £1,000 more annually than the newer Fiesta. And the more miles you do? The more you save.

You don’t have to go for one of the above cars to make significant fuel savings, of course; there are lots of fantastic newer used cars on the market that have great fuel efficiency and will save you significant amounts of money in fuel over the course of its life.

The cost of repairs: should I keep my old car or buy new?

It’s a fact of life that as a car gets older, the more work they’ll need to keep running as safely and efficiently as possible.

As well as the likelihood of faults arising, simple wear and tear means that certain parts will need replacing from time-to-time and your car will need more work to get through its MOT.

According to data by WhoCanFixMyCar.com, the number of repairs needed and the average repair bill for your car increases every year, so updating your vehicle on a more regular basis (say every four or five years) can save you a significant amount of money in repair bills.

Are newer or older cars cheaper to insure?

Perhaps one of the biggest myths that hold people back from buying a newer car is the belief that they’re more expensive to insure.

You can see the logic behind such thoughts, as a car that’s two years old will be much more expensive to replace than a car that is five or six years old.

However, this is just one of a myriad of factors that insurers consider, and you will often find that it’s actually cheaper to insure a newer used car than an older one, because:

• Newer cars being less likely to breakdown
• Newer cars are more likely to be serviced regularly
• Newer cars will almost always have higher safety standards

Upgrading your car improves your safety on the road

Comparing an old car with a newer model, one of the main differences you’ll find is that newer car models are loaded with safety features. These often include:

• Antilock brake systems
• Traction control
• Electronic stability control
• Airbags
• ISOFIX child seat anchors

Additionally, all cars made since 1997 go through vigorous, in-depth and independent testing by Euro NCAP. If you’ve got a car older than that, it may not have been as rigorously safety tested as it could be. Even if your car is newer, if it wasn’t built within the last five or six years, it may not be as safe as it could be.

Because safety is a big consumer concern, 5* Euro NCAP ratings are a major selling point for manufacturers, which is why we now see more and more cars awarded this for attaining the highest standards of car safety.

Euro NCAP has a search facility on their website where you can compare the safety of your current car with the safety ratings of models you may be looking at buying, which is especially useful if you’re debating ‘should I buy a new or used car?’.

Peace of mind

Perhaps the most compelling reason to update your car is the peace of mind that this can bring you. Knowing that you have a newer car that is safer to drive, cheaper to drive, and much less likely to break down lifts a weight from your shoulders.

Whether you use your car to commute thousands of miles per year or just for local travel, knowing that you can place your complete faith in your car is a tremendous plus, and lets you get on and enjoy life free from worrying about potentially expensive car repairs.

Is buying a new car worth it?

As you can see, there are a great number of reasons to update your car and buy a newer used vehicle. But is buying a new car worth it - surely you get all of these benefits too by purchasing a completely new vehicle?

Indeed you do. However, there is one important differentiator between buying a newer used car and purchasing a brand new vehicle: car depreciation.

Depreciation is essentially the loss of a car’s value over time. Like any asset, any car (unless it’s a particularly valuable and sought after classic or vintage vehicle) loses value over time, but the vast majority of this loss is experienced in the initial years of a car’s life.

The exact amount of depreciation depends upon the make and model of car but it’s generally accepted that as soon as you drive a new car off the forecourt, it loses between 10% and 30% of its value. According to Carfax.com, in fact, on average, a new car will lose 60% of its total value over the first five years of its life.

With a newer used car that’s 3-7 years old, for instance, you get all the improvements discussed above but you’ll avoid the big drop in value. That’s great news if you decide to sell it in the future.

Convinced that purchasing a newer car is a good idea but not sure how much you can afford? Why not work out what your monthly repayments could be with Zuto’s car finance calculator?