The logic & beauty of buying 1 - 3 year old used cars

By now, regular readers of Team-BHP will all know the obvious & not-so-obvious advantages of buying used cars . There are some interesting articles which you must go through:

The not-so-obvious advantages

Beauty of lateral upgrades

New vs Used cars

How to buy a used car in India

But buying a used car that is <3 years old is another level of "pre-worshipped". Truth is, the last 3 pre-owned cars that I myself bought were all:

  • Under 3 years old
  • Had <20,000 km (two of them had <10,000 km)
  • Still covered by the factory warranty
  • Up to 40% cheaper than new!

Basically, you can buy a car that feels brand new for 60-75% of the new car price. Have listed below why I love buying "almost-new" cars! Main disadvantage = the price premium for "almost new" makes it more of an alternative to a new car than a 5-year old used car. That said, this price premium is negated as you will inevitably hold onto your almost-new car for longer than a 6-year old used example.

Nicely depreciated

They say, the minute you drive a C2-segment sedan out of the showroom, it loses Rs. 50,000 - 75,000 in value. New cars depreciate the fastest over the initial 3 years, gradually slowing down thereafter. This stiff depreciation means that you will be paying a lot less for an "almost-new" car. I bought my 3-year old Honda Civic for 8 lakhs & some change, when a new one cost almost 16 big ones. A 2 - 3 year old used car hits the sweet spot in terms of "new'ness" and "mouth-watering price".

Still in factory warranty!

As they are almost brand new, many of these cars still come with standard warranty coverage from the factory! Effectively, your risk is ZERO.

Extended warranty available

What's more, you can still buy extended warranty for your almost-new car. Manufacturers now offer extended warranty packages up to 7 years! This is something I have followed for all the used cars I've bought since 2004.

They still feel like new!!

Today's cars age very slowly. This works in your favour as a 10,000-rupee detailing session @ 3M will have it looking & feeling like new. If I could put a number to it, I'll say that a <3-year old car can be made to feel 85-90% new.

Will be a current model

An "almost-new" used car is likely to be a current model still on sale. There is inherent value in that! Plus, you are more or less guaranteed spare part support for a long time.

Superior Reliability

With a few exceptions, almost every car model on sale today offers good reliability. The expensive maintenance & problems usually start after the 6th year of ownership. If you buy an almost-new car, not only can you enjoy long warranties, but the car's uptime will also be far superior to say, a 5-year old car.

Will be taken care of better, since its newer

Fact is, even the worst of owners take maximum care of their cars when new, so very frankly, it is tough to find a badly maintained <3 year old car. Almost all of them look + feel good.

Will be serviced only at authorised service stations

99% of "almost new" cars are maintained exclusively at the authorised workshop; this wouldn't be the case with 5 - 6 year old cars. You are guaranteed quality upkeep. What's more, the car's history is easier to source (good luck getting its history from Pappu garage in a back lane).

Safety standards-wise, it might be up to date

Consumer awareness, surprise GNCAP testing & government regulations are leading to safer cars in India. Buying a more recent model means it might have superior safety kit & a more solid structure than say, a 5 - 6 year old model.

Your family will be more accepting

Face it, there is a social stigma around used cars. Not just from your neighbours, but odds are, even your own family members vehemently oppose a "second hand" car. If you show your family a gleaming almost-new car that feels tight, yet saves a couple of lakhs, they just might open their minds.

You can finance it!

Getting a loan for an almost-new <3 year old car is easy as pie. The same for a 5 - 6 year old car is impossible as no bank wants to repossess an 8-year old car (i.e. if you don't pay your EMIs after 2 years).

Depreciation Benefits

Believe it or not, businessmen can actually claim depreciation on used cars! On my most recent used car, I saved a couple of lakhs in tax benefits alone. The newer the car, the higher the depreciation benefits. Talk to your CA before buying as there are certain conditions to be met (e.g. for your company to claim benefits, the car you are buying should've been company-registered).

Choice, choice, choice!

The Indian market now moves 24-lakh new cars every year. Over & above, impulsive buying habits, the frequent need to "upgrade", lifestyle enhancements, social media & career changes mean there is a healthy supply of 2 - 3 year old cars in the market.

Sometimes, a used car can be superior to new

Do you want to drive an S-Cross 1.6L? Or a Skoda Octavia / Superb Diesel? A Hexa AWD or Polo 1.2L GT TSI? You can only buy these cars in the pre-owned space as they've been discontinued by their makers. In case you were wondering, yep, 3-year old Abarths are available on OLX.

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