Cars are expensive. These are one of those large investments that need a conscious assessment of all available options before deciding on the purchase. With cars there are only two options. You can either buy it new or buy it used or pre-owned. If you’ve been caught in a dilemma as to which option you should consider, then the words that follow should help you decide the path to take.
Life of Car
New cars have their entire life ahead of them and every part in the car is brand new with zero wear. There may be some manufacturer defects but in almost all cases, everything will work as it should for a long time. You’ll also get the assurance of warranty and service from the manufacturer itself.
The life of a car becomes a consideration only for used cars. It is generally accepted that, with regular maintenance, cars will run trouble-free for 1,00,000 kilometers. Nearly all cars available in the used car market are well under this 1 lakh kilometer threshold and will continue functioning as designed for many more years and miles. You also get the benefit of warranty on used cars as well, but only if you buy certified used cars.
Value or Cost
This is the most important consideration when it comes to cars. The initial cost to buy, even with a loan, is quite a large sum and weighing the inherent depreciation attached with cars. New or Used, every car depreciates in value at a steady rate. However, the effect of the depreciation will be different for a new car buyer and a used car buyer.
As soon as a new car is bought and driven, in the first 6 months, a brand new car will depreciate by 15% of/from its initial value and by up to 25% in the first year itself. From that point onwards, the depreciation rate floats between 5%-10%. So if a new car buyer sells his car in 3 years, his/her car’s value would have decreased by up to 35%. For a used car buyer, the effect of depreciation is a lot less compared to a new car buyer. If the used car owner sells his/her car after 3 years, the value of the car would have decreased only by 15%. Let’s use the Hyundai Grand i10 Sportz to illustrate this point. A brand new Grand i10 will cost you Rs. 5.7L while a 1 year old pre-owned Grand i10 will cost Rs. 4.35L. By applying the respective depreciation rates, the new Grand i10 will lose Rs. 1.71L of its value while the pre-owned Grand i10 loses only Rs. 65,000 on the price paid.
When it comes to settling on a particular variant of a specific model, the feature list is where the decision is made. Most people generally make the argument that most of the tech features in used cars is outdated and not the latest and greatest. The discussion here comes down to getting the latest features, but not all when you buy new OR getting the best in-class features, albeit slightly older.
Let’s again take the Hyundai Grand i10 (Diesel) as an example. For the price of a brand new Grand i10 Era, you can easily get a 2 year old Grand i10 Asta, which is the top of the line model in the Grand i10 range. You’ll get additional comfort features such as keyless entry, power windows, and fog lights. While the base car maybe same with regards to the technical specifications, but when it comes to everyday usage, these features contribute a great deal to long term driving satisfaction. Include the price of the cars — 6.12L for the Era and 4.80L for the Asta — and the decision becomes a no brainer.
When it comes to buying a car, there are two sides to that coin. New cars are good if you want the latest model in your garage. Objectively though, used cars offer greater value which completely offset the shortcomings of buying a used car.
And when you buy a used car from Spinny, the value increases much more than just buying a used car from anywhere else.