The insights come from an ME Bank survey of 1000 young Australians. The lender says the status that comes with owning a new car is to blame for Aussies making poor financial decisions.

Almost half of Generation Z people surveyed (those born in the 1990s to 2000s) say they “would feel embarrassed driving a used car”, instead opting for a new car, often under finance.

ME money expert Matthew Read says there is a misconception about the relative running costs of new cars versus used cars, with many owners mistakenly thinking new cars cost less overall.

Read says around 61 per cent of car owners agreed with the statement ‘used cars will cost you more in the long run’ (with servicing and maintenance costs).

“A new car loses significant resale value as soon as you drive out the door, a pattern that continues over the first few years of its life, making it one of the biggest costs of owning a new car,” he says.

According to the survey results, 25 per cent of all car buyers said their car’s running costs were higher than expected and new car buyers are shelling out $20,000 more than used car buyers on average.

Read says buying a two or three-year-old car won’t necessarily cost more to run, especially if a preventative approach has been taken to maintenance.

Many newer models are subject to capped-price servicing schemes that make it easy to budget for maintenance. Some manufacturers such as Hyundai and Holden offer five-year warranties along with "lifetime" capped-price servicing programs for all modern vehicles, regardless of their mileage.

“Owning a new car is a nice luxury, but could $20,000 be used for another savings goal like a house deposit or even simply covering the rising cost of expenses?" Read says.

“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 pre-loved vehicle could save you a lot of money.”