Buying a brand-new car is a significant investment, even if you are planning on buying a budget-level entry hatchback car or have your eyes set on a larger sports utility vehicle. The other option to choose, especially if you are on a very tight budget or are just learning to drive, is buying a used car. But which is better, buying a new car vs used car?
There are many options for buying a used car because there are so many models to choose from. The used car market has come a long way and is growing every year. You might be in a dilemma about whether to buy a new car vs used car, so we have put together this blog to help you out.
New Car Vs Used Car, Which is Better?
Let’s discuss the topic of which car to go in for, a used car or a brand-new car.
The main reason that people want to buy a used car instead of a new car is the cost involved. A used car costs much less than a new car.
If you can manage to find a used car that is in good condition and doesn’t cost too much, the value for money proposition is very high and you can get your money’s worth. But we can’t always be guaranteed a sparingly used car or one that is in good condition. Often, a used car will start to give problems as we drive it, and that costs us more money in the long run. So, is it a good option to buy a used car?
Let’s have a closer understanding of a new car vs used car to see the differences. Here is an infographic that outlines different parameters for new and second-hand cars.
Brand New Car
Second Hand Car
Buying Price (Initial Cost)
Not much, much less than a used car
Could be high, especially if the car has been used a lot
High – usually won’t let you down
Low – You don’t know when it is going to give up
Features and Technology
Loaded with the latest tech and convenience features
Misses out on most of the modern features and tech
Will come with the manufacturer’s warranty package
May not have warranty depending on the age of the vehicle, and whether it can be transferred
Car insurance premium
Will be low
Relatively low due to higher fuel economy, less maintenance, high efficiency and reliability
Relatively high due to increased maintenance costs, low fuel economy and low reliability of the car
What Are the Pros of Buying a Brand-new Car?
The experience of owning and driving a new car is like no other. The new car smell, and smooth engine, let you simply glide down the roads. But buying a new car has several other advantages which are listed below.
New Features and Modern Technology –
When buying a new car, you have the option of choosing some new features that you won’t get with older cars such as GPS navigation, Bluetooth connectivity and Android Auto and Apple CarPlay. These creature comforts, modern technology and safety features may not be available on older cars you buy on the second-hand market.
Car Loan Interest Rates –
When purchasing a new car, buyers can avail attractive interest rates on loans and attractive financing options. The advantage is that the interest rate of car loans on new cars is less than interest rates on loans taken for an old car. Banks also have exciting offers, financing options and deals during special occasions.
Apart from being loaded with the latest technology and modern features, new cars are very reliable and it is unlikely that you will have any issues with the car. New cars have good build quality and the equipment is of high quality ensuring long life of components and less chance of breakdown when you least expect it. Reliability for new cars is good overall.
Maintenance Costs –
Other than regular consumables like scheduled oil changes, the cost of maintenance for new cars is generally lower. For the first year, or 10,000 km, you can expect almost no issues and will not have to spend much on maintenance of your car. Dealers also offer free services for new cars and you can be assured of maintenance free driving for the first couple of years of driving.
A standard warranty package is provided with every new car for the duration of the first few years of ownership or until a certain number of kilometres are covered. The warranty usually covers major components of the car like the engine and electronics. Some dealers even provide free roadside assistance with the purchase of a new car. Warranty is usually not covered for used cars as they are considered second owners, and usually the warranty period would have expired.
What Are the Cons of Buying a New Car?
Buying a new car can have some disadvantages like the high initial cost, insurance cost and depreciation rate. Here are some disadvantages to buying a new car.
Expensive to Buy –
Buying a new car is often an expensive investment even if you are looking at an entry level small hatchback. Whichever segment the new car belongs to, it will end up being more costly than a used car. If the budget of the new car is a major concern, some buyers may shy away from a showroom deal and opt for a less expensive alternative. The only advantage of buying a new car is that you get a brand new, trouble free, low maintenance and reliable car.
Insurance Premium –
When applying for insurance on a new car, the premiums are very high because they are based on the initial buying cost of the car. Since premiums are based on the value of the car, a new car will have a higher premium than a used car which would have depreciated in value over the years. Insurance is mandatory for all motor vehicles, so this is something you just can’t avoid.
Pros of Buying a Used Car
Buying a used car has a lot of advantages such as low initial cost, low insurance premiums and a low depreciation rate. When it comes time to sell the car, you won’t end up losing a lot on the initial buying price. Listed below are some of the advantages of buying an old car.
Low Insurance Premium –
As compared to a new car, buying an old used car commands a lower initial buying cost. The affordable price tag is due to the depreciation of the vehicle over the years. If you manage to find a sparingly used, old car, then you get more value for your money.
Low Insurance Premium –
The market value of a used car is much lower than a new car. The insurance premium reflects this cost and therefore you will be able to insure your used car for very little money. Insuring a used car costs much less than insuring a new car.
Negligible Depreciation Rate –
New cars lose most of their value in the first few years of ownership. In fact, it is said that a new car loses value the minute it is driven out of the dealership showroom. When buying an old, used car, the first owner would have already taken the depreciation hit and would have to sell the car to you at a reasonably low price. If you manage to maintain your used car well, you may still get a good price for it when it is time for you to sell the car, which also saves you money.
Cons of Buying a Used Car
Some of the disadvantages of buying an old car are that there is no warranty coverage, so if something goes wrong, you will have to bear the cost of repair. Maintaining old cars is also more expensive given natural wear and tear. Thirdly, you will miss out on the latest technology and features.
No Warranty –
It is a possibility that the used car you are buying is way past its warranty period, or the previous owner has claimed warranty already and the car is no longer covered under this package. Old cars are prone to reliability issues, especially if they have been used roughly or not maintained well. This may rack up your costs at the mechanic shop if something were to go wrong.
Maintenance Costs –
A used car is generally less reliable than a new car. The benefits of free service at the dealership will no longer be valid and you would have to spend extra on spare parts and components if they need to be replaced from time to time. Hence, the cost of service and spares will end up burning a hole in your pocket. In the long run, components will invariably start to fail and will need to be replaced, so this is also another cost you cannot skip on.
Lack of Modern Technology and Features –
Old, used cars may not have the latest features that modern technology has to offer like GPS navigation, automatic climate control, traction control and important safety features like ABS with EBD and dual front airbags. In a way, this is a compromise you will have to accept if you are planning on buying a used car. Of course, some of these features may be added to your car, but it will come as an additional cost and sometimes it’s just not worth the extra money you spend.
Which is Better, a Used Luxury Car or a Brand-new Economy Car?
The advantages and disadvantages of buying both a new car and an old car have already been outlined. But what about the choice between a used luxury car and a new entry level car.
The new car is better if you are looking for a reliable, inexpensive, and maintenance free car and are willing to skip on all the bells and whistles of a high-end premium car. A second-hand luxury vehicle may come loaded with features and comfort, but the car may end up spending longer time in the workshop than on the road.
A new car would be a sensible choice to make as you will get a reliable, daily driver that requires very little maintenance.
Buying a car is an important decision, and although there are many options out in the market, one of the most important distinctions is the one between a new car and an old one.
Both have their advantages and disadvantages and a careful analysis must be undertaken to come to a viable conclusion. New and old cars are easily found in the market. Dealerships stock the latest models for sale to customers and often have a stock of pre-owned cars as well if the customer is looking for them.
Today, there are options to even buy a new or used car through online methods as there are many apps and websites that host car sales platforms according to the customer’s choice.
A new car gives you the experience of having the latest features at your fingertips, a safe ride, warranty coverage and reliable driving for the time you own the car. However, it ends up being quite expensive to buy and insure, although you will end up spending less on maintenance.
A used car is inexpensive to buy and insure, but you may end up spending more on maintenance and the car may not be reliable enough to give you a worry-free driving experience.
Then comes the choice between a budget friendly new car and a premium, luxury used car. In this case the initial costs will be comparable, however, the used car may be expensive to maintain and you may have new issues with the car as the years progress, especially if you are looking for a dependable daily driver.