Story sponsored by Savvy.
In times of economic uncertainty, there's one commodity that is valued above all others: predictability.
Whether it's a constant revenue stream for your business or a regular salary from your employer, knowing how much money you've got coming in and how much is going out is essential.
This is especially true of your household budget. The ability to sufficiently balance your accounts is entirely reliant on an intimate knowledge of what bills are due in the coming month and how much you owe.
While most of us are hyper aware of this principle when it comes to things like mortgage repayments, gas and electricity bills, and the kids' school fees, many of us don't consider - or choose to ignore - the biggest potential cause for unexpected expenses: our cars.
An unexpected breakdown can be costly... and stressful
On a long enough timeline every vehicle begins to become unreliable. The older it is and the more kilometers there are on the odometer, the more likely it is to suffer a mechanical failure.
While some of this risk can be mitigated of course - by having the vehicle serviced regularly and taking good care of it - the reality is: nothing lasts forever and unfortunately your beloved sedan is no exception.
An unexpected mechanic bill can be real bugger, especially if you haven't got a some money tucked away for a rainy day.
Four new tyres here, a timing belt there, new shocks, spark plugs, brake pads, an exhaust, and in extreme cases, even a new engine... It all adds up. At a certain point, it can end up costing you more in upkeep over a three or four year period than the vehicle is even worth.
A new or late model car is far more reliable
That's why, while it might seem counter-intuitive to buy a new or late model car while you're supposed to be watching every penny, if you're savvy, it can be a good idea.
Of course there are pros and cons to everything - and each individual's personal circumstances need to be taken into consideration - but generally speaking, if you can afford to purchase a newer car there are some real advantages.
First and foremost is that they're far more reliable and less likely to breakdown than an older vehicle. All new cars also come with both statutory guarantees as well as manufacturers' warranties.
While the manufacturers' warranties may vary, they typically cover the first three years or 100,000kms, whichever comes first. Dealerships may also offer extended warranties as an optional extra.
Additionally, in accordance with Victorian law, if you purchase a car from a licensed trader they must provide you with a statutory warranty of three months or 5,000kms on any used vehicle which is less than 10-years-old and has travelled less than 160,000kms.
If you buy new or near new car you can get a better interest rate
However, when purchasing a new vehicle or used vehicle, it is important to consider how much the vehicle will cost you in the long term.
For example, if you buy a new car you're far more likely to be approved for car finance and achieve a lower interest rate.
This happens because lenders do a risk/benefit analysis. They like taking on lower risks investments, so as a reward, you gain better interest rates.
Conversely, when you buy an older vehicle, it makes it more difficult for lenders to approve your loan. Therefore, you'll likely pay more in interest.
You can also save money on insurance
Another big plus is that insurance premiums are lower on newer vehicles. Like with financiers, insurance companies employ algorithms to determine risk before offering a quote.
The most important thing to do when considering buying a new vehicle or finding an insurer is to shop around.
Savvy can help you gain both finance and insurance at a competitive rate. For example, they're currently offering car loans for as little as 4.99%p.a. They can also help people secure bad credit car loans.
But beware of depreciation
While owning a newer vehicle is - generally speaking - preferable to an older vehicle if you can afford it, there are some things you need to be aware of.
Firstly, if you buy a new car it will depreciate significantly in the first three years, which could affect the resale value.
However, if you purchase a late model vehicle - less than three years old - you can pick it up at a much lower price and in some cases even still be covered by the manufacturer's warranty. It's the best of both worlds.
While purchasing a newer vehicle will result in an extra repayment, it will be a regular one and you'll know how much it costs. It's predictable - and when you're trying to budget - that can save a lot of stress.