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When buying a car for the first time, deciding whether to go for a new or a second-hand one can be tough. Moreover, whether new or used, purchasing a car is a big financial decision that involves considering several factors like depreciation, maintenance costs, etc.
If you are considering whether to buy a new or a second-hand car, keep reading this blog.
Read more: Best Cars You Can Buy Under Rs 5 Lakh
New Car vs Second-Hand Car: Factors to Consider
To make an informed decision on whether to buy a new car or a second-hand car, here are some factors to consider:
- Buying Costs
One of the biggest advantages of buying used cars is their low buying costs. When you buy a new car, you have to pay several associated costs, such as RTO fees, registration fees, road taxes, etc.
However, when you purchase a second-hand vehicle, the first owner already covers all these costs.
- Maintenance Costs
New cars have lower maintenance costs than used ones. Most dealers provide free car servicing for specific miles or time travelled, which you don’t need to pay for.
Used vehicles have higher maintenance costs due to frequent engine oil changes, battery replacements, air filter changes, etc. Moreover, worn-out components may need to be replaced in a timely manner to ensure optimum vehicular performance.
- Car Loan Interest Rates
The loan interest rate for buying a new car is much lower than a second-hand vehicle. This is because new cars have a higher resale value, making it less risky for the lender to offer credit.
Alternatively, used cars have a lower resale value due to the depreciation factor. This increases the lender’s risk in financing second-hand vehicles, leading to higher interest rates.
Read more: Top 8 Points To Consider When Buying An EV
- Rate of Depreciation
The depreciation rate for new cars is around 20% annually. Moreover, the maximum depreciation occurs in the first 3 years, resulting in an approximate depreciation of 40% within this time.
There is no specific depreciation rate for used cars. It depends on the maintenance costs and damages that need to be repaired while selling the vehicle. However, the depreciation rate for second-hand cars is usually lower than that for new ones.
- Insurance Costs
Used cars also have lower insurance costs than new cars. This is because the older the vehicle, the lower its Insured Declared Value (IDV) and premium amount will be.
Moreover, when you buy a used car, the chances are that its vehicle insurance policy is still valid, further lowering your buying costs.
Things to Remember When Buying a New Car
- Average Usage
One of the most crucial aspects to remember when buying a new car is to analyse your average usage. It will help you decide on the required engine, transmission and mileage specs, enabling you to make an informed decision.
Additionally, you should check out whether the car has the features you will need on a daily basis.
- Resale Value
Considering the resale value of your selected vehicle before making the purchase can be an intelligent move. This will give you an idea of how much you can receive if you decide to sell the car in the upcoming years.
In India, cars from manufacturers like Maruti Suzuki, Toyota, Honda, Hyundai and Volkswagen usually have a higher resale value.
- Ownership Costs
Ownership costs are another crucial aspect to consider before buying a new vehicle. These include the car’s loan payments, fuel consumption, maintenance, and spare parts replacement costs.
- Car Insurance
Getting car insurance is mandatory when buying a new car. Depending on your requirements, you can opt for comprehensive cover, zero dep car insurance, third-party coverage and even other add-ons to choose from.
Furthermore, if you have another car and have a No Claim Bonus on its insurance policy, you can transfer it to your new vehicle and benefit from lower premiums.
Also read: What’s Driving These Autonomous Vehicles?
Things to Remember When Buying a Second-Hand Car
- Vehicle’s Condition
When purchasing a used vehicle, it is crucial to examine its exterior and interior components, such as doors, windows, boot, framing, tyres, engine, etc. You should also discuss the vehicle’s mileage with the owner and, if possible, take a test ride.
- Registration Certificate and Other Essential Documents
Check the authenticity of the car’s registration certificate. It should contain the vehicle’s details, such as the engine number, chassis number, make, and model. If it is a duplicate, it will have a DRC marking.
Furthermore, you must check the other essential documents like the car insurance policy, road tax receipt, original purchase invoice, PUC certificate, etc.
- Maintenance Records
Take a look at the vehicle’s maintenance records. This will give you an idea of how often you may need to service the car, whether it needs any immediate repairs, and whether any recurring issues have occurred.
- Second-hand Car Insurance
When purchasing a second-hand car, its insurance policy must be transferred to your name. If there is no active policy, you must consider taking a used car insurance. You need to do this proactively by collaborating with the seller; otherwise, there will be several hassles if the vehicle gets into an unfortunate accident.
Moreover, you need to check the extent of coverage the insurance policy provides. If it is not adequate, you can purchase add-ons during policy renewal or discontinue the policy and buy a new one.
Whether you should buy a new or second-hand car depends on your budget and preferences. If you have just learned to drive, you can go for a used vehicle, get some experience behind the wheel, and then buy a new car.
However, if you already have prior driving experience and wish to buy a vehicle for the long term, purchasing a new car can be a better option.
