Buying a car is a major decision for any family or individual. For most families or individuals, it’s once in a lifetime decision. There is no dearth of impressive and attractive models in the market but for the common buyers who are actually the backbone of the market, price, and features matter. Thanks to online platforms that have created an option to select whether to purchase a new car or a used car. The value of cars depreciates over time and therefore it is not an investment. You should be careful regarding its effectiveness. Use the used car valuation toolfor a favourable deal. For example, if you commute short distances then is it worthwhile buying a new car. Similarly, when you buy a second-hand car, you need to consider a lot of factors as the maintenance cost is higher and mileage is lower. There are pros and cons to both and these are discussed in this article. As the used car market has been more organized, many buyers are peeking into this market online for their coveted car. The Indian used car market was valued at $24.24 billion in FY2019, and the projected CAGR of 15.12% during the forecast period (2020-2025).
Pros of buying a new car
- Maintenance cost is lower in new cars
There is no maintenance cost for new cars for the initial 6 months to one year. After that, you might need servicing. The first few services are generally free and it differs from one company to another. To keep an old vehicle, you have to change your engine oil 3-4 times in a year. There can be expensive services such as cleaning the air filters, changing the battery, etc. If a used car is not a good condition, these costs may burn a hole in your pockets.
- Features and technologies are more advanced
The latest technologies become outdated within a few months. To buy new cars, the features and technologies are updated regarding accessories and equipment. In old cars, you may upgrade some of its features, however, that shall cost you extra money. For technological enthusiasts, you should prefer new cars.
- An interest rate of car loans is higher for pre-owned cars
It is easy to avail of car loans for both old and new cars. The interest rate however for loans of old cars is higher than the loan for new cars.
Pros of used cars
It is quite clear that buying used cars is cheaper and they are highly dependable. If you want to know a used car valuation, you can use a used car valuation tool to know its cost. Some of the advantages of buying used cars are stated below:
- Lower car insurance
If a car is less worth, it will cost less for insurance. No need to pay road taxes, registration fee, etc. When you buy a new car, you have to pay the road taxes, registration fees, RTO fees, and others. However, when you buy old cars, you do not need to worry about the expenses because they are paid already by the first owner.
- The depreciation rate is lower
The depreciation rate for new cars is much higher than used cars. The maximum depreciation occurs during the initial three years. During the first three years, if you take care of your car in the best possible way, the value shall be reduced by 40%.
- Fewer costs
Buying used cars allows for buying the best cars for money. You can buy a second-hand luxury car at a very low price. Moreover, you can check the several factors before buying a car.
- Extended warranty
Pre-certified dealers provide strong warranties including the remaining balance of the factory. Buyers get the chance to buy an extended warranty.
- Good for beginners
It makes a lot of sense to buy a used car if you are learning to drive. You may cause accidents while driving. Considering that the rate of depreciation for new cars is higher compared to old cars, these damages can affect directly the resale value of a car. If you buy a new car and the car faces major or minor damages because of an accident then looking at it is more pinching psychologically than second-hand cars.
New or Used? The bottom line
The decision to buy a used or new car must be based on several factors. You should be comfortable with the different financing options as well as the long-term effects on the personal financial situation. Also, to get best decision you must follow the financial tips by experts before making any decision. You should feel safe and you need a reliable car. You should be sure that the new car has features, comfort, and amenities.
Buying a car is a big financial decision and therefore use a used car price calculator to check its price. So necessary research to enjoy your ride.