New Car or Used Car!
Which one to buy?
Many a times we find it confusing to decide whether to buy a new or a used car. In a used car you can save a lot of money, whereas in a new car you get the latest product with warranty & assurances of a car manufacturer.
Let’s first understand the advantages & disadvantages of buying a new car.
Advantages of Buying a New Car:
- You get to own latest design, styling and technology
- Owning the latest adds to your status & an unused car that adds to snob value
- Manufacturer backed warranty and after sales facilities
- Low maintenance cost for the first couple of years
Disadvantages of Buying a New Car:
- 25-30% of the car’s value erodes in the 1st year
- New car loans tend to be of longer tenure, leading to higher interest outflow
- You pay higher insurance premium as the value of the car is higher in the initial years
- New cars are not completely defect free. Recalls are live examples of design deficiencies in a new car.
- A complete new product with superior technology may not meet the expectations of the market and could be discontinued, leading to higher rate of depreciation. Ex: Maruti Suzuki A Star
Now, lets see the advantages & disadvantages of a used car
The advantages of buying a used car:
- You can save a lot of money
- Avoid huge 1st-year depreciation that applies to new car
- Buy a bigger and better car within the given budget
- You get much wider choice of cars within a given budget
- Flexibility to change faster
- Some older models are more appealing than their latest versions
- Today you can buy certified used cars, that have undergone multi-point checks and come with warranty and after sales services
The disadvantages of buying a used car:
- Buying a poor condition car (accidental, odometer tempered, poor condition, flood damaged cars)
- You don’t get latest gizmos and superior technology in used cars
- Dealing with individuals or unorganized dealers, who don’t have adequate knowledge about the features and benefits of the car. They are looking to get rid of the old car, rather than recommend you the right car that is suitable to your needs
- Tedious paperwork, higher used car finance rates
- Higher search cost. The time taken to find the right car can be longer and tedious, you may have to wait a good couple of months before you spot a right car
You may also like to read – used car buying guide