ARTICLE: Buying a New Car vs Used Car

[GTO]

Originally Posted by ajmat

Another thing to add is that if you crash an older car despite being insured, it hurts!!!

You pay upto 60% of the costs as you bear the depreciation of the replaced parts. Think hard about how you will repair the car or be brutal and sell it as scrap if repair costs are excessive

Very true. If you were to have a moderate accident in a 5 lac rupee W124 / Ford Mondeo / Old Honda Accord, the repair costs could cost you more than the car itself.

In these cases, more insurance companies would write it off as a total loss.

[Venkat]

Good post....

1. My car ( the car that I drive ) is a Honda City 1.3L. 1999 model bought after one year with under 10K kms on the odomoter. Owned by a doctor whose dispensary was within walking distance. Took the car to Lonavala on a few sundays and then decided to sell the car since it was now one year old. He bought it at about 9 Lacs and I got it at about 6 lacs. A 3 lac saving in capital. It is now having 168K kms under its belt and still running fine. Calculate the interest costs on the price difference and it has paid well for itself.

2. My wife's car is a WagonR. Late 2003 model. Bought in Dec of 2004 with about 11K kms on the odo. Maruti True value certified by Vitesse. Original price is probably 4.5 lacs and got it for 3.2 lacs. Not a dent on the body. Some new car smell too....if that is important. Hardly used. But a good saving in capital cost again.

I have made it a strong point ONLY to buy second hand cars for the reasons enumerated by GTO.

Venkat

[hyper-VTEC]

I think its always better to buy directly from the owner (through a broker, maybe) rather than buying from the Used Car Dealers. I meant there are some individual brokers who charge x% of the sale value and you can see the car in its actual condition at owner's place.

Having said that, can we have a list of these kind of brokers in different cities and grow that list as and when TBHP members gets hold of new good ones?

[amu1983]

>> used car prices are cheaper in Mumbai compared to southern cities
Understandably so. The sea-air of Mumbai shortens the life of the engine components. Or, perhaps it's only a common misunderstanding.

>> can we have a list of these kind of brokers in different cities
Most big auto agencies run their ADs daily in the classified sections of most leading newspapers. It's easy to make out a broker-placed AD from an owner-placed one. Brokers/Agencies often list multiple cars in the same AD, have several contact numbers, do not mention the price in their AD, have the cliched words like 'Limited time Offer', 'Never before price', etc. Owners instead will mention a good-time-to-call them, the expected price, and other details in full.

[2fast4u]

i would say to buy a used car u certainly need to have some skill level with a very good eye for detail exterior interior and a very nice ear when u have the engine started.

once exterior interior is fine to ur liking then

first thing in engine bay area is the appearance of the engine itself,
check for leaks on the head gasket area, check the filter,
open the oil cap and inspect oil cap it tells a lot - the cap and the sight of the rocker,
open up a plug and u know what is engine performance level and it can tell u many things,
idle engine sound can interpret many details and when throttled exhaust can tell you alot more.
the test ride according to me should be like a rally driver with sharp lefts and rights and that will help you in knowing how good the suspension system bushings, ball joints, steering response are.
there is a lot of things to say but these are some basics,

Yes have to agree a new car has all the stuff and gizmos but after 3 yrs of warranty it is a real pain when you come to know how some electrical failures or some auto mechanisms going off without warning.

My colleagues Renault Laguna 3.3yrs old had a problem with the auto lock mechanism in which the One Rear door would remain open and when taken to dealer it was found the Block mechanism is kaput a replacement was BD110 = 12K Irs approx.

There are Cons and Pros in both segments whether New or Old but it finally all depends on your budget

With a cash strapped budget of 5 lac if someone bought a Getz rather than a W124 thats a rational buy but if someone still bought a W124 then he sure is an motoring fan.

ps when i bought my car (UAE) 5 yrs back it had 135k when i was getting it transferred to Bahrain i met the owner by chance at the Traffic Dept and he mentioned the car had over 700K when he was first owner and so he reset meter to 90K.
So buying a used car you will never know the exact mileage. For me Id say it was sheer luck to get a marvel of an engine.

[realswifter]

Originally Posted by 2fast4u

i would say to buy a used car u certainly need to have some skill level with a very good eye for detail exterior interior and a very nice ear when u have the engine started.

once exterior interior is fine to ur liking then

first thing in engine bay area is the appearance of the engine itself,
check for leaks on the head gasket area, check the filter,
open the oil cap and inspect oil cap it tells a lot - the cap and the sight of the rocker,
open up a plug and u know what is engine performance level and it can tell u many things,
idle engine sound can interpret many details and when throttled exhaust can tell you alot more.
the test ride according to me should be like a rally driver with sharp lefts and rights and that will help you in knowing how good the suspension system bushings, ball joints, steering response are.
there is a lot of things to say but these are some basics,

One can look at the sides/edges etc of the engine bay and check for any wielding/alterations has been done. This will let you know if any major accidents has happened or not. Checking of small screw holes/unused holes in the bay will also help you to figure it out .

[Hemanth]

My piece of advice here.It's always better to go for a new car considering the abuses which the car has undergone and the tricks they do while selling the car. My suggestion is to go for a used car only if you know the person who is selling the vehicle and you will be aware of his driving habits and also any accidents or major repairs the vehicle has undergone.

[Maverick1977]

My take is that it’s always better to buy a used vehicle unless you fall in one of the below mentioned categories:
1) Your usage is really very heavy and involves a lot of travel on the highways. Better to buy a brand new vehicle as you might not know an existing problem in the used vehicle.
2) Diesel Car - If you land up buying an abused diesel car, it might give you much more heartburn than buying a similar petrol version of the same. The very purpose of saving money on fuel will be offset by the cost of maintaining the same.
3) No time for maintenance - If you are seriously hard pressed for time then no use going in for a used car.
4) Company funding (Leasing) - Many companies give their employees an upper limit of buying a car for themselves. If this is the case then buy a new car and drive it well
5) Chauffeur Driven - If you are buying a car which you are never going to drive then its best to buy a new car else the driver will come up with all sorts of reasons because its a used vehicle (my dad's personal experience)
6) Style Matters - It’s really difficult to flaunt a used car, unless it’s been modified to the hilt. Try telling your friend that you have bought a used car & the probability of him being really curious to see it will be low.
7) Long term keeps - There are many of us who would like to keep their cars for at least 5 - 8 years. It’s always prudent to go for a new car in such cases as depreciation will not take a major toll on you. Also you will always know what’s going on inside your car as you would have been with it right from day1.
8) Business Purpose - People buying a car solely for business purpose (read private tourist) should go in for a new car. Simply putting, a new car (especially a new model) will always attract new as well as your existing customers.

Glad if some one can add anything to this.

[GTO]

Splendid points there, Maverick. But the one that takes the cake is:

6) Style Matters - It’s really difficult to flaunt a used car, unless it’s been modified to the hilt. Try telling your friend that you have bought a used car & the probability of him being really curious to see it will be low.

LOL!

[deetee]

Out of my 3-4 months experience of buying a used car ,this is the comparison of buying a used car vis-a-vis a new one:
(i will elaborate on some of maverick's points)
Without a second thought go for a new one if:
1.Your requirements are very clear- i.e.,
a.) your usage is really heavy(as maverick said)- more than 1000km per month(i have seen cars doing more than 3000km per month also). In that case a new diesel is better than a new petrol unless you prefer petrol for some strong reason.
b.)You are going to keep it for more than 5years(maverick already mentioned): For this , you must be a person who doesnot relocate from the current state within this span of time, also you should not be of the kind who likes to change cars frequently. Getting a vehicle transferred from one state to other in the first few years will be costing a lot.
c.)You are sure it will serve your family/business purposes(unless you are buying it for yourself only) for next 4-5 years; else you may have to go for a bigger /fuel efficient car soon.
d.) You are keen on showing it off(credit to maverick). If you do want those wow and other expressions from your colleagues/neighbours/relatives , well go for a new car(model).
2.)If you do not have time to maintain the car(credit to maverick)-often you may have to end up spending atleast half a day or more in the first few months of ownership of a used car.So, if time and patience are too valuable for you, then spend more money for a new car.
3.) If you have to take a loan for the car, then go for a new car; by the time you repay it, you will end up paying less for loan on a new car than on a old car+maintanence.

Now a used car should be your call , if:
1.) Your requirements are not that clear:
a.) you can't be sure you will use it daily(happens mostly with first time buyers/learners).
b.)not sure whether you will stay long enough in the current state(people going overseas/deputing to other states)
c.)Your family/business may need more spacious/FE/sturdy car in future( a newly married couple may need a bigger car down the line-if you go for a hatch now)
d.)You are the kind who wants to keep changing cars either for the feeling of owning various makes or to show off in your local circle(read relatives/neighborhood); then go for a 3-4 year old vehicles at best bargain possible, spend about 10-20k getting them repaired if needed; then sell it in an year without much loss(probably for same rate you bought them).
2.) Any used car ,however well maintained , commands some attention in first few months of ownership. So be prepared and if you don't mind occasionally getting your hands dirty, you may go for a used car.If you already don't know some good local mechanic, make sure you find one good mechanic near by your place of residence/business. They do better job than a service center in many cases.
3.)If you want to go for a loan of more than a lakh (of loan amount not car price) on used car, then better go for a new car taking double that loan amount(2lakh in this case). Because, interest rate is high on used car loans and add to it frequent service/spare costs that might be needed.
So, if you have to buy a used car, buy whatever good car that comes within the cash limit you have.
4.) even buying a good used car itself is time consuming- be prepared to wait for about 1-2 months to get a good one. If you are in a real hurry - think again about your needs to see if you can buy a new 800/alto to fulfill your needs. They may serve the purpose and if you want to sell soon(1-2yr) you may not loose as much as you may on bigger cars.If you buy a used car in a hurry, chances are that you might have overlooked a major defect/foul play in that process and you may end up spending more time/money getting it right.

Well, that's just an attempt at weighing the decisions, finally its your money and your decision ; so research,seek advice,think and finally obey your heart/mind whichever is close to you.:-)

[krishnavamshi24]

Interesting posts and i seem to have made the right decision as i am gonna buy a used car and i wouldn't be using the car on a daily basis but i may be going for a occasional long drive...say once in 2 weeks ...what do you say

[Maverick1977]

A used car is strongly recommended for any 1 who is buying it to get a hands on driving experience. Guess this is very self explanatory as no sane person would want their car to be damaged.

[nishantgandhi]

This is totally dependent on your mentality. And of course, there is a price differential. So, it is better that you identify your needs first and then take a call on the one that suits your purposes.

For instance, if you are someone who is looking for a regular upgrade in say, every two-three years, then a second-hand car makes sense. Moreover, if this is your first car and you are trying to learn driving on it, a second-hand car definitely makes much more sense. On the other hand, if you are someone who is happy using the same vehicle for a number of years, then a new car is definitely recommended. Of course, there are other important parameters like your negotiating skills and the previous owner.

Before buying any car, here are a few things you need to consider:

1. What is your budget for the car?

2. What is your monthly budget for the car?

3. How do you intend to use it? Within the city or even outside the city? (Heavy weightage towards the latter means that you need a MUV or multi-utility vehicle like Tata Sumo, Mahindra Bolero etc.)

4. How long do you intend to keep the vehicle?

Now that you have answered the above, you know whether you want a new or an old car. But before you go for that old car, get yourself a cool car mechanic that is, a trustworthy one who will check the car for you. Ask him to check all the parameters like tyres, suspension, cooling etc.

[GTO - Touring]

Cant say I agree with that entirely, Nishant. The "falling apart in 5 years" Fiats and Ambys are of a bygone era. Modern machinery of today can easily give you anywhere between 7 - 10 years of reliable ownership, of course, if maintained well. So even if I want to keep a car for long, I dont see any issue in picking up a 2 - 3 year old Santro / Swift / NHC / Corolla / Accord and letting someone else take the massive depreciation hit.

[nightrider]

high value cars are very expensive in Hyderabad than mumbai. a 2007 ( Feb) Rider which had done 20,000 km was sold on 15 Feb for 11,00,000 which is a stupid buy. OR shall we say a FANTASTIC sell.
the buyer did not do his homework well.