ARTICLE: Buying a New Car vs Used Car
Regular product launches, frequent model updates and easy access to financing have created an abundance of used cars in the Indian automotive market. We have seen some tempting propositions that would be better described as “pre-worshipped” rather than "pre-owned". Product quality in this market is much higher than ever before and a good find will offer incredible value for your money.
Team-BHP has studied the pros and cons of buying a pre-owned car and now shows you why it’s worth a second look.
• More car for your money: OR Same car for lot less money. Depreciation of value accounts for the major cost of owning a car – why not let someone else take the hit? For the price of a new car you can bring home a well-maintained pre-owned car from a much higher segment. Sedans from segments C and D lose as much as 40% of their value in the first year alone. A one-year old Skoda Octavia RS, which retails new for almost Rs.15, 00,000, can be had for about Rs.9, 50,000 – little more than more than the price of a new Honda City Vtec. Further down the price range, a late-model Honda Accord can be had for the price of a new Suzuki Swift, and a 3 to 4 year old Honda City, Mitsubishi Lancer or Maruti Baleno will go for close to the same price as a new Alto.
• Reliability: Gone are the days of used cars needing regular trips to the mechanic. With most cars on the market today, long-term reliability is part of the package. Japanese manufacturers typically rule the roost in this area and offer reliable performance for at least 200 000 km, if properly maintained. A well-maintained sedan with 40 000 km on the odometer can be considered a virgin.
• Certified pre-owned cars: Certain authorized dealerships now offer certified pre-owned cars. While these cars carry a premium on their price tags, they are put through an exhaustive inspection and change of parts to ensure a near-new car experience. Some certified pre-owned cars are also cosmetically improved by the dealer.
• Extended warranties: If the pre-owned car you are looking at is only a year or two old, odds are that you can take advantage of an extended warranty. There are two types of extended warranties: those that cover almost all components (like a new car warranty), and others that warrant only the engine and transmission.
• Financing availability: Financing is now available for used cars, though your financial institution may have restrictions on the model vintage.
• Less depreciation: If you are a business owner, the taxable benefits of depreciation are likely to be important to you. Used cars depreciate less than new cars and consequently offer fewer tax write-offs.
• Not the latest: The best deals to be had are often on cars that are a generation or two old, such as older Honda Accords, Toyota Qualis, and Maruti Zens. Of course, there are also some good deals available for current generations.
• Higher interest rates: The interest rates on used car loans are significantly higher than on financing for new cars. Potential customers generally buy pre-owned cars with cash. On the bright side, if you or your family has invested in fixed deposits, you are in luck. Taking a loan against fixed deposits leads to very lucrative interest rates, minimal paperwork (if at all) and flexible repayment plans. Click here to read the full discussion on this subject.
• Car history: Pre-owned cars may have been damaged by negligence, floods, or accidents and only superficially repaired. Verifying car history can be a time-consuming chore.
• Difficult to find: There is much effort involved in searching for a pre-owned car that suits your taste and budget. You may have to scan many advertisements and visit several dealerships before finding the car for you. It is not as simple as walking into a showroom and filling the order form for a new car.
• Maintenance: This is an often-overlooked factor. The cost of maintaining a pre-owned car of a given price will be more than the cost of maintaining new car of the same price. For example, a 5 lac rupee pre-owned Honda Accord or Mercedes Benz W124 will cost more in upkeep than a new 5 lac rupee car.
Good analysis GTO. It is often menioned on this site that used car prices are cheaper in Mumbai compared to southern cities. Here in Hyderabad, prices of used cars are not mouth watering. The asking price is much more for Diesel cars. For successful models like Octavia and Accent CRDI, it doesn't make much sense to buy a used car.
The asking price for a 2004 model Accent CRDI is 6 - 6.5 lakhs.
Nice article, GTO.
Another CON - lack of new car smell/feel. I need that in my car. :)
Very informative article GTO and lots of things that buyers need to know, having said that,, what is this practice that Hyundai have done with launching the Verna at the Accent price point and lowering the Accent price to the Getz price point,,what will that do to resale values of Accent and Getz
It is very difficult to find out the accident met vehicles unless and otherwise you have some car expert examining the car for you. Every individual could not find one. A broken hand/leg is a broken hand/leg & could not be as functional as undamaged one.
great article dude!! you obviously have done quite a bit of research here!! you are perfectely right about the maintainance bit....at times this exceeds the cost of the vehicle by more 1.5 times, over a period of a couple of years, especially with diesels.
one small piece of advice here, if at all you are looking at a used car go for one which is 1 year to 2 year old once not more than that .see you can never predict the usage of used cars .i have seen cars which had worn out of clutch plate well before 5000 kms ,and its a costly affair to change one.like wise one more point is that car brokers tend to lower the price of the car while buying pointing out the parts changed , for example windshield-if its replaced what the hell can go wrong with the performance of the car.so if you come across such cars and harmless parts replaced you can go for it at a bargain.
carefull buying guys
Thanks GTO for that information. I am thinking of buying a pre-owned scorpio, i will keep your information in mind.
For some reasonable info on how to buy an used vehicle, this link would be very useful.
GTO / MODs
can we have one of this threads with just contact numbers of dealers/agents etc for used cars by T-BHP's for all Newbies/T-BHPians looking for Used cars. it doesnt matter with various cities so the guy can atleast take time and search this thread. That might be very useful i guess.
Sorry if a thread like that already exist, i searched but cudnt find.
intresting thread,i feel based on my experience that nowadays you do get excellent deals if you have the right contacts,
speaking from bangalore thanks to real estate boom i have come across some deals which are no doubt good from bargain point of view but reasons are sometimes ridiculous and frivolous but i would consider 'the reason for selling'factor to be equally important...i would even investigate the reason if under my capacity
some deals i have come across from my collegues and my own selling experience...
my collegues innova 'v' spec-2 months old and 3600kms in which aprox 3000kms are towards the superb(until now)bangalore hassan highway,sold it for 3 lakhs less!!!reason he felt that he was getting (physcologicaly) worked up inside the vehicle and THATs why he sold it.
a friend of mine into properties again has never seen any of his vehicles cross 2000kms/3months has a x-trail for sale now run 3000 odd going for i think 18 lakhs which is about 4-5lakhs off
i have my own dicor vx 4*4 (11month old done 5500)kms in i would not like to mention the offers iam getting
point is such deals are nowadays available in plenty and these are depreciated vehicles other wise new....
what would you say if you get some of these old yet new vehicles now available aplenty,also look in the financiers yard you actually get unregistered/3-digit odo reading complete with dried flowers still on...how thats another story..........
If we can add a checklist to this thread as to what to look out for when buying an used car that would make this thread really comprehensive and helpful - for example, top 20 questions you need to ask and items to look for while buying an used car.:)
one way of looking at it is :
other things being equal - your new car will be 6 months/8-10k kms old in 6 months time! In some sense most of the premium you pay is for that!
In Bangalore - given how easily people 'forget to brake' into surrounding sheetmetal, it probably ages a year in 6 months. If it drives well, has a good service history, and you can get it checked out professionally - used makes a lot of financial sense.
In the case of bikes - you get them run-in! And in case of procuring through finance companies - real cheap.
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
Old vs New
Sold it for 1.21 ..had a little problem since it was too old..but the care I took for the car sold it for me.
I guess an old buggy(4 yrs) is anyday a better option PROVIDED one knows to assess one fairly well and one has a passion to maintain it himself/herself.
Own a Versa now which I bought for 25% less when it was seven months old.Looks and performs as good as new even now...but somehow driving pleasure is nowhere near the Esteem.
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