Used cars are expensive due to a supply-demand imbalance exacerbated by the pandemic, causing a shortage of new cars (semiconductor chips, shipping delays) pushing buyers to used markets, while people held onto their older cars longer, reducing trade-ins. This, combined with overall inflation, higher dealer acquisition costs, and increased demand for reliable transport, keeps prices elevated, with some market distortions from auction dynamics also playing a role.
The most obvious advantage of buying a used car instead of a new car is that used cars are cheaper. That's because used cars have already depreciated, and a used car has already taken most of its depreciation hit. There are other costs to consider, as well.
The most unreliable used cars
Yes, used car prices in Australia are generally expected to continue softening or dropping in 2025, moving from pandemic highs towards a more balanced buyer's market due to increased supply from returning fleet vehicles, better new car stock, and cooling demand, though prices might not fully revert to pre-COVID levels. Buyers have more choice and bargaining power, especially for SUVs and passenger cars, while the influx of Chinese brands and growing EV stock also puts downward pressure on some segments.
Generally speaking, the best time to purchase is at the end of the month, when dealers are keen to meet their sales targets. Also, shopping during the winter months or right after the release of the new model of the used car you're looking at, can offer better deals as inventory changes and prices drop.
Car dealership red flags include high-pressure tactics (focusing on monthly payment over total price), hidden or unnecessary fees (prep, market adjustments), refusal to provide VIN or history reports, mandatory add-ons (tint, paint protection), issues with the vehicle's condition (rust, bad paint, strange smells, missing service records), requiring a deposit for a test drive, and tactics that obscure the final price or rush your decision, all signaling potential overpricing or hidden problems.
Key seasonal periods, such as the end of the financial year and the months around Christmas, can offer significant savings. New models, plate releases, and winter months can create great opportunities for used car deals. Take advantage of dealership sales targets and quotas for better negotiations.
For under $25k, top new car choices often include the Kia Picanto/Rio, Suzuki Swift/Ignis, Hyundai Venue, and MG ZS/MG 5, offering great value with modern tech and safety, while used options open up reliable models like the Toyota Corolla, Mazda CX-3, and Mitsubishi ASX, alongside performance used cars like older Ford Mustang GTs for driving enthusiasts. The best choice depends on whether you prioritize new car warranty and features or more space/power in a used vehicle.
January is the best overall month to find a used car deal, with 55.6% more deals. July 4th ranks as the worst holiday to buy a used car, offering 22.4% fewer deals than average.
Australia's "25-Year Rule" allows importing classic and collectible vehicles (cars, motorcycles, light commercials) older than 25 years, under the Road Vehicle Standards (RVS) laws, by obtaining a Concessional RAV (Register of Approved Vehicles) approval to avoid strict compliance with modern Australian Design Rules (ADRs). This "rolling" rule means the vehicle must be at least 25 years old at the time of application, simplifying imports for enthusiasts but still requiring compliance with ADRs relevant to its original build year, plus some modifications for safety like VINs or child restraints.
A "poor man's Ferrari" refers to more affordable sports cars that share styling cues, mid-engine layouts, or performance characteristics with actual Ferraris, with the Toyota MR2 (especially the SW20 generation) being the most famous example due to its resemblance to the Ferrari 308/348, while other contenders include the Honda NSX, Acura NSX, and even older models like the Rover SD1 or Fiat X1/9, all offering exotic looks or handling at a fraction of the price.
According to a 2021 Insurify article, the Subaru WRX is the most ticketed car on the road, followed by the Hyundai Genesis Coupe and the KIA Stinger. Luxury and sports vehicles are more likely to attract a police officer's attention. The list of the most pulled cars goes as follows: Subaru WRX.
Contents
If you want the best balance of cost and dependability, a used car that's 2-5 years old is usually your best bet. Here's why: A car loses most of its value in the first 2-3 years, so buying nearly new avoids the steepest depreciation.
High Center of Gravity
Vehicles that sit higher off the ground like SUVs, pickup trucks, and vans are more likely to roll over. Light trucks have a much higher rollover rate than sedans. Adding passengers or heavy cargo raises the center of gravity even more.
No Interest Payments: Paying cash means you avoid paying interest to the lender over the life of an auto loan. For example, financing roughly $41,000 at 5% over 60 months can easily cost around $5,000 in interest. Spend What You Can Afford: When you pay cash, you're naturally limited by the money you already have.
To qualify for a $30,000 car loan, most lenders prefer to see a credit score of at least 660 to 700. That being said, your credit score is only one part of the equation. Lenders will also consider: Your debt-to-income ratio (how much you owe compared to how much you earn)
A general rule of thumb for car mileage is that the average vehicle accrues about 10,000 to 12,000 miles per year. To determine if a used car has good mileage, divide the odometer reading by the car's age. For example, if you're looking at a 5-year-old car, a good mileage range would be between 50,000 and 60,000 miles.
So, let's explore some practical ways to help you negotiate like a professional at a used car dealership.
12 Best Used Cars You Can Buy For Under $20,000
Most experts recommend a 20% down payment for new cars and 10% for used. Getting pre-approval might provide clarity on potential interest rates. Pre-approved auto loans can provide insight into the potential interest rate your lender will be able to offer.
Which used car is best to buy?
This article posits that there is a 20/4/7 rule, which is that you should plan to put 20% down, have your payments go no longer than four years, and the payment should not be more than 7% of your gross monthly income, or 15% of take-home pay.
The biggest mistake first-time car buyers make is failing to do thorough research and budgeting, leading to emotional decisions, overspending, and focusing only on monthly payments instead of the total cost of ownership, including interest, fees, and long-term expenses. This often results in purchasing a car that's too expensive or not the right fit, getting trapped in long, costly loans, and paying too much due to high-pressure tactics or not negotiating.
Whether you know much about cars or not, keep a checklist to inspect a used car before buying: