New or Used Car: Pros and Cons of Each Option

Should you buy a new car or choose a nearly new/used one? In this article, we compare both options across 12 practical criteria, from price and warranty to taxes and financing. Throughout the article, we group nearly new and used cars together, as they share virtually all the same advantages over a new car: a lower purchase price, slower depreciation and greater financing flexibility, among others.

Customisation Options

With a new car, customers can choose the engine or powertrain and customise the vehicle to their preferences. A used car, on the other hand, already comes with its specifications and features defined.

That does not mean a used car cannot be customised later — by tinting the windows, changing the wheels or painting the roof, for example. However, in addition to the cost of the modification, it may also need to be legally approved, which can require an extraordinary Technical Inspection (Type B inspection).

Winner: New Car.

Technology

A new car will generally feature more up-to-date technology than a used car, whether in terms of connectivity or driver-assistance systems.

Winner: New Car.

Price

With a few rare exceptions involving specific promotional campaigns, a new car is always more expensive than a used one.

Winner: Used Car.

Depreciation

A new car tends to depreciate more sharply immediately after purchase. Used cars also lose value, of course, but depreciation is generally more gradual.

Winner: Used Car.

Warranty and After-Sales Service

A new car comes with a manufacturer's warranty, normally around two years depending on the brand. Some manufacturers offer longer warranty periods, although these are often subject to mileage limits or apply only to certain components. Having a manufacturer's warranty does not necessarily mean having complete coverage.

For used cars, the warranty varies depending on the dealership and can range from 18 to 36 months. Some dealerships, such as Benecar, offer strong after-sales support and a comprehensive warranty covering all components except wear-and-tear items such as tyres, brake pads or clutches.

At other dealerships without their own workshop, the statutory warranty may operate through a third-party warranty provider. In these cases, if a fault occurs, the customer may have to arrange the repair with a workshop and obtain a quote, which is then subject to approval by the warranty provider.

Winner: Tie. The quality of the warranty depends primarily on the dealership you choose.

Preventive Maintenance and Servicing Costs

A new car tends to have higher preventive maintenance costs, as many manufacturers require servicing to be carried out at authorised workshops.

With a used car, servicing can be carried out at the dealership's own workshop or at another workshop that follows the manufacturer's maintenance schedule.

Winner: Used Car.

Tax Deductions When Buying a Car

This factor becomes particularly relevant when the vehicle is purchased by a company.

Regarding VAT, a deduction may apply to both new and used cars, although only companies and VAT-registered taxable persons can benefit from it. It is also worth remembering that vehicles taken in from private individuals often fall under the second-hand goods scheme; in these cases, VAT is not itemised and cannot be deducted.

As for Portuguese Vehicle Tax (ISV), electric vehicles are exempt, both for private individuals and companies. Plug-in hybrids pay only 25% of the tax, benefiting from a 75% reduction, which also applies to both groups. Since ISV is only levied on new vehicles, this tax incentive can only be used when purchasing a new car.

Winner: New Car, particularly for buyers looking for an electric or plug-in hybrid vehicle.

Delivery Time

A new car usually takes longer to be delivered, as it is often built to order — a process that can take several months.

A used car tends to be available much sooner, although some preparation may still be required. At Benecar, for example, the vehicle is prepared to be delivered free from damage, and this process may take a few days.

Winner: Used Car.

Insurance Cost

Because a new car has a higher market value, its monthly or annual insurance premium tends to be higher than that of a used car.

Winner: Used Car.

Corrective Maintenance

Corrective maintenance refers to any repair or intervention that is not part of routine servicing, such as repairs following a minor accident or replacing a faulty component that is not covered by the warranty.

Parts for a new car tend to be more expensive than those for a used car because newer models generally have fewer replacement parts available on the market.

Winner: Used Car.

Financing Options

New-car dealerships generally work with the manufacturer's own finance company. Used-car dealerships, on the other hand, usually work with several finance providers, allowing customers to compare offers and choose the option that best suits their needs.

However, in order to present or propose financing options to customers, the dealership must be registered with Banco de Portugal as a credit intermediary. Benecar, for example, is one such dealership:

Benecar operates as a credit intermediary in an ancillary capacity, on a non-exclusive basis (registered with Banco de Portugal under no. 0000944), and is authorised to present or propose consumer credit agreements. It has contractual relationships with Banco Primus, Montepio Crédito, Banco Credibom, Cofidis, BBVA and Santander Consumer. The granting of credit is the sole responsibility of the financial institutions and is always subject to assessment and approval.

Winner: Used Car.

Vehicle History

For a new car, this criterion does not apply, as there is no previous usage history.

When buying a used car, however, it is always worth checking its maintenance history, previous use and origin — including whether the vehicle was originally sold in Portugal or imported.

Winner: New Car.

In Summary

Of the 12 criteria compared, the new car wins in 4, while the used car wins in 7, with 1 tie.

For most customers, a used car offers the best balance between total cost, warranty and flexibility, particularly when purchased from a dealership with its own after-sales service and comprehensive warranty, as is the case with Benecar.

A new car, however, remains the right choice for buyers who value customisation and the latest technology, or who want to make the most of the tax incentives available for electric and plug-in hybrid vehicles.