When To Go For A New Car Or Buy A Old One?

Buying a brand-new car does have a lot of advantages and a lot more choice. But buying a pre-owned car can save thousands of bucks upfront and in the long time run. Buying a new car can be enticing. But you should have a look at the amount of money you can save by just getting yourself a pre-owned one. Thus it is advisable to take a prudent decision after considering all the vital factors.

In today’s world, many people think that buying a car is an investment. But in the real-world scenario, it isn’t so. Rather it is a depreciating asset. Your options for choosing a brand-new car or a pre-owned is determined largely by the fact whether you qualify for a loan or not. However, buying a pre-owned version of your favourite model and make can be a real money saver if you take a wise decision and check your car for encumbrance prior to purchase.

Why Buy a New Car?

Getting a new car for you comes with its own set of advantages.

• Warranty Aspect: The first and foremost among them is the warranty. All the new cars, irrespective of the model and make will hardly need any repairs in the first few years of purchase. You simply need to focus on their maintenance.

• Low-Interest Loan Options: Dealers of all makes do have direct tie-ups with different banks or financial institutions. They might provide loans at a considerable low-interest rate. This can result in paying a lesser amount of interest over the life of the loan amount.

• Loaded With New Features: A new car is always loaded with all the new features available in the market. It also has lower emissions and better gas efficiency. You can even buy a hybrid or a battery-powered vehicle to lower down your transportation expenses.

You will definitely not get all such new features in a used car. So if you do not have any budget constrain simply go for a new car.

However, there are certain factors which might make you think twice before you purchase a brand new car. Let’s have a look at them in the lines below.

Things to Consider Before Buying a New Car

• Depreciating Asset: As soon as you bring your new car out from the showroom its value starts to depreciate. The new car mostly loses its value in the first two to three years of purchase. In other words, just by putting your name on the title you just lose a huge amount of money in depreciation.

• Chances of Becoming Obsolete: The manufacturer of the car might bring in new models of the same car that may devalue your return on investment. Remember a new car loses around thirty percent of its value by the end of the first year itself.

• EMI Burden: You have to pay monthly instalments of a new car which is a fixed cost. This might make a big hole in your pocket. So you need to be sensible while you decide to buy a new car.

Why Go For A Used Car?

• No-Risk of Initial Depreciation: The first owner of a car has already borne the depreciation burden when it was new. So you are now on a much safer side when you buy it at a used condition. At certain cases you might receive the same amount of money that you invested in buying the used car. Thus the ROI (return on investment) on a pre-owned vehicle is near about the same or a bit less.

• Good Finance Options: You can always find good finance options from your local bank or a credit union. In such cases, you are not losing money on the depreciation cost. You might even get a zero-interest loan that is generally available on a brand-new car.

• Less Insurance Premium: A used car is expected to have a much lower insurance premium when compared to a brand new car. The value of a used car has already depreciated. This means you are paying a much lower insurance premium than what you might pay for a spanking brand-new vehicle.

• Greater Savings: You can always save a few more bucks when you are buying a pre-owned version of your favourite car. However, it is always recommended to check your car's history report before you make a final call. This will give you an idea about certain vital details of the car such as its finance and stolen check.

Checks and Balances before Buying a Used Car

• Fewer Choices: With all the positive aspects underlying, buying a used car does have some negatives too. You won’t be having a lot of choices in terms of model, make and colour options when you go for a used car. You are just limited to what you get in the market. You also need to search around to get the perfect used car as per your liking.

• Reliability Issues: A used car might not be as reliable as a new car and you might end up doing some repairs on it. If you are buying a late model pre-owned vehicle it might be a very good deal. You might get some factory warranty left. You also get the option to extend the warranty without incurring a huge sum of money.

• Get The Car Inspected: With the improvement of technology cars have become more and more reliable. But on the safer side, it is always a wise idea to find out the history of the car from a reliable place. It is always advisable to get it inspected by a trusted mechanic before investing in it.

• Higher Interest Rates: Financing options might be a bit more expensive in the case of used cars. Most banks or money lenders charge a bit higher interest rate on a preowned vehicle. Whereas almost all new cars do come with very lucrative finance options to attract customers. You can see another post on ten essential facets to check before buying a used car. You will get a better idea of the advantages and disadvantages of a preowned car.

On a final note, a person needs to be more flexible. You might need to compromise on several aspects while hunting for the best and attractive price for a used car. Buying a car that is three to five years old can be a very good deal.

Making the Final Call

Getting the best deal on a new or used car is dependent on several aspects. The thumb rule for buying a preowned or a new car is that you should be able to pay off the debts in an approximately three to four year time period. It is always recommended to do thorough research and choose the best-suited model according to your needs. Do make sure you shop from a trusted dealer and do the necessary repair jobs before parking the car in your garage.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes