[GTO]

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

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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

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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!!

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Today's cars age very slowly. This works in your favour as a 10000-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

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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!

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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

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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.

[sv97]

Well written and articulated as always!!

Apart from this one more reason I can think of for people buying such cars is they can partly pay in cash as well.

Like if a used car costs around 10 lacs then maybe 6 lacs through bank and rest through cash.

Also, people who might be able to afford new cars but cannot buy new due to similar reasons (of cash and payment through bank) can buy such low run cars.

[RavSam]

When I am casually window shopping cars on sites like cars24 where they have an elaborate (true or not) report of the car's interior, exterior and mechanical conditions, I've seen that a lot of new cars under 2 years have dents, scratches, spare tire with an exclamation mark and (boot) rusting, sometimes even damages or fogged up lamps which make make me not like them.

Even if we consider that these are an easy fix at fraction of the price saves I've also seen very new cars with engine oil as "dirty". Can a dirty engine oil be fixed completely? Like eliminating it entirely and replacing it with new?

The deals sometimes are mouth watering but the "engine oil dirty" makes me stop.

Also, the interest amount for loan is higher. Unless one is paying entirely by cash.

[ninjatalli]

One caveat - from a pre-worshipped car market perspective, expect to sweat it out the maximum during the bargaining specifically for almost-new cars. Compared to this, buying a 5 year old car (for example) would be a breeze on the money discussions.

What you gain in peace of mind on the expected condition of the car (still in warranty, minimal wear and tear, etc.), you'll have to lose some of it during the price negotiations.

The key mantra is patience and time. Stick to your guns. Be ready to walk away if the deal isn't matching up on the price you had finalized/decided from your side.

[turbo]

I guess I'll pass.

The lightly used cars have not depreciated enough for them to make a killer deal.

And if you have to get them on finance, the extra rate of finance on used cars will kill whatever savings you will have.

And then there's the challenge of collecting the cash, if you're buying outright.

And then everyone in the family wonders "If he's selling the car after 2 years only, it must either be problematic or unlucky"

[SmartCat]

In Bangalore, it does not make sense to buy 1 to 3 year old cars because the quoted price is still very high. I have never seen 30% to 40% lower price for 1 to 3 year old cars, either at an used car dealer or in classifieds. Eg: 2019 Maruti Brezza





Not sure if actual deals happen close to the quoted price though.

[wildsdi5530]

Ground reality in Bangalore is that a 1 year old car is sold at almost new car price. The seller would have got it at a good discount, the owner would have written off the Taxes, and will have a hefty profit when selling.
For Example a 2019 swift run 5.5K kms is on sale at Rs. 6.9 Lakhs. On road according to Carwale is Rs. 7.71 Lakhs. Am sure the dealer will have discounts of Rs. 20-30K. So the depreciation is about Rs. 50K. The tax benefit claimed by the first owner would be Rs. 1.5 L and 15% of Ex showroom price.
2020 Trendline petrol run 2.5K kms quoted at Rs. 7.0 Lakhs, On road before discounts is Rs. 7.17 Lakhs.
2018 Merc C-progressive run 7.5K kms quoted at 39 Lakhs sounds like a good deal considering that a new one would cost Rs. 61.5 lakhs before discounts today. But when you look back in 2018, these used to cost around Rs. 45 lakhs. So again not a great deal.

[jetsetgo08]

Great thread on picking VFM beauties.

But, the sorry state is that most of the high sellers are not all worth purchasing, as the price would be relatively high in many cases. Rather one pick the non-mass market cars like Renault,Nissan,Tata, Mahindra or the european cars and enjoy the depreciation.

[Scorpio80]

It's a very interesting thought. I have been in the market for a 20L-30L car and the thought of going for new D1 segment sedan vs "Almost New" big-3 car has come up quite often. Here are some things that my thoughts revolve around:

1. Credibility of the seller / dealers / service history - Chances of lemon being sold in guise of a nearly new car. We see a lot of example of cars impacted by floods, accidents, damaged piece, etc being sold

2. Prices quoted - I have spent a lot of time in US and KBB is very reliable in terms of pricing. Very difficult to assess in India. We have multiple threads on Team-BHP itself where markets are cornered by used car dealers and cartel like working between the different dealers. If one buys from the dealer, they add a premium due to the perceived mental peace of additional checks

3. Financing - For a person planning to take a loan, there is additional 2% interest rate on financing for used car, which on 20L loan is approximately 40K/year and will take away some, if not most, of the depreciation benefits of the used car over the loan duration

4. Ownership time - Over a long period, the cost differential will reduce as new car will hopefully last longer.

Any conflicting thoughts are welcome, will help me in making my decision as well.

[Turbo yoda]

I bought a Bangalore regd 2017 polo gt tsi, which had run just 14k kms for 8.2 lakhs last year... That's a two year old flawless car for 30% less than onroad price in Bangalore.

[PrideRed]

Originally Posted by SmartCat

In Bangalore, it does not make sense to buy 1 to 3 year old cars because the quoted price is still very high. I have never seen 30% to 40% lower price for 1 to 3 year old cars, either at an used car dealer or in classifieds. Eg: 2019 Maruti Brezza
Not sure if actual deals happen close to the quoted price though.

Totally agree on this. Every time I plan to buy a car, I look at used car market, only to realize buying a new car is a better bet. There are plenty of article these days which say almost new Fortuner at the price of Seltos, but in reality a 10 year old Fortuner costs as much as a top spec Seltos or even more, atleast here in Karnataka.
Unless you are looking to buy a flop model, buying a almost new vehicle in KA doesnot make any sense.

[anoopGTkrish]

Interesting views. I have to agree with others on the Bangalore used market. I have never seen more than 20% depreciation being added for cars up to 4 years old. Not exactly a city that favors used car sales. A glance through TBhp classified section will give you enough proof for this.

Another aspect is that used cars make more sense if you have the means to purchase in cash. Bank loans for used cars usually come at very high interest rates and wouldn't make financial sense to buy a rapidly depreciating asset at such high interest rates.

[Abhinav V]

I couldn't agree with this idea more.
We were looking for a used car for my mom. A simple, no nonsense, easy to drive automatic car for ladies. There were a lot of 5-6 year old used Celerios, Alto K10s, and Hyundai i10s, but us buying a used car for the first time, wanted to buy something relatively newer.
Finally after months of searching online, I decided to head to true value and check out myself.
The day I headed out, I found a 1.5 year old Alto K10 that had just arrived from the first owner's house moments before I had reached. It had done only 10,900 kms (Nov 2017 model). We bought it in August 2019. Best part is that it had a 2 year factory warranty and since we bought it from true value, we got warranty again. The cost of the car also didn't cross our budget. Apart from minor scratches here and there, it was as good as a new car. I'm completely satisfied with the purchase.
Our initial plan was to buy a 5-6 year old car and change it after 2-3 years. But now, I have no intentions of upgrading unless there's an absolute necessity.
After going through team bhp's articles on used cars, I have decided to purchase only used cars in the future. The idea of buying more of a car for lesser than actual cost has only strengthened my belief in it.

[sumeethaldankar]

Most 1-3 year old cars will have close to new car price as most people who will be selling these will not want to lose a ton of money on the car which is just 1-3 years old. eg a used 2018 civic was retailing for 18 lakhs. On Road is around 20-23 lakhs. Instead of risking a used car with 18 lakhs I will just suck it up and shell out the additional 3-4 lakhs for the peace of mind that the new car was not abused/accident free/free from issues like flood stricken car etc.

It makes sense in the lower end of the segment where the risk is less eg a used Alto/Santro etc where the amount of money counted is not large. A 2-3 year car would make a great second car for people used for a cheap run about and who already another vehicle at their disposal.

[shobhit.shri]

Originally Posted by wildsdi5530

But when you look back in 2018, these used to cost around Rs. 45 lakhs. So again not a great deal.

Considering the price hike of the last few years, I guess the depreciation of the used cars is not that high. There is also absolutely no point in comapring with today's price of the car.

You can get a used Honda city in Bangalore for approximately 6L, while the new is costing around 15L. It might seem like a great deal but the previous owner has probably paid 9-10L for it in 2012-2013!