Every type of vehicle is a significant investment – whether it is new or previously owned. And it is never a small investment! Over the years, the auto industry has grown immensely. It continues to grow, especially after the pandemic, where social distancing has increased, and people prefer to travel in their own vehicles. Indians have also seen to develop a growing interest in second-hand cars! So, if you are planning to decide which one to choose, here is a table that helps you understand the key differences between a new and a used car:
Get the latest features
Miss out on the latest technology
Manufacturer-provided warranty package
May not include manufacturer warranty
Advantages and Disadvantages of Purchasing a New Car
Of course, buying a new car has an appeal. Everything adds to the joy of purchasing a new vehicle, from the freshly untouched painted car exterior to the clean and sleek interiors. It is even a status symbol for many consumers! But there are also some disadvantages tied to it. This section explores the several advantages and disadvantages of owning a brand-new car:
A manufacturer warranty adds to the reliability quotient of a new car. Although it is highly unlikely that your brand-new vehicle will face any issues in its initial years, if you encounter any problems, most cars come with a solid warranty pack that covers almost every repairable damage.
- Latest Technology
If you have the budget to go overboard, you can choose to experience cars with the latest technology and exciting new features!
- Low Maintenance
At least for the beginning six months to a year, a new car won’t give you the trouble of any maintenance costs. You will even be provided with free services, the duration varying from brand to brand. Hence, the overall maintenance cost of a new car is lesser compared to a pre-owned model.
One of the biggest disadvantages of owning a brand-new car is its price. It is costly, no matter whichever segment of car you plan to purchase. This hefty price tag is a dealbreaker for many running on a budget.
- Quicker Depreciation
Compared to used cars, new cars are quicker to depreciate. According to many, a vehicle loses its value within the first few years of its ownership, and a major chunk will be lost within the first few seconds itself!
- Costly Insurance
Besides the expensive price tag, a new car comes with expensive insurance premiums. Depending on the value of your car, paying insurance for a new vehicle becomes a costly affair.
Advantages and Disadvantages of Purchasing a Used Car
Although the pre-owned cars lose the charm a new vehicle carries, it doesn’t mean that they don’t have any advantages! But every coin has two sides, so even used cars have disadvantages. Let’s explore them in detail:
- Affordable Prices
When a second-hand car comes down to you, it has already undergone the depreciation process. So, a pre-owned car holds a lower price tag than its counterpart.
- Cheaper Insurance
As the value of a vehicle decreases, even its insurance premium price reduces. You will be expected to pay a lesser insurance price on a pre-owned car compared to a brand-new vehicle.
- Higher Upgrade
As we all know, a new car equals a heavy price tag. But, with a used car, you can upgrade the car segment to an upper class in an affordable within-budget range! Financing option like a used car loan is available for these upgrades.
- Limited Selection
Finding the car model that suits all your needs while also coming with a decent package of features and technology gets hard with used cars.
- No Warranty
Depending on the age of your car, there won’t be any existing manufacturer-provided warranty available anymore. This can be a dealbreaker for people concerned with higher maintenance costs.
- Lack of New Features
A used car might not be ideal if you want trending car models, holding the latest features and safety technology.
The Ultimate Decision – Used Car vs New Car
It is your choice to pick between a new or a pre-owned car. Since cars are a huge investment, looking through all the above aspects is essential! If you want to enjoy the latest features and don’t want to miss out on the safety technology that today’s trending models come with, and if you even have the budget for it, go for a brand-new car. But if you want to stick within a low budget, with a cheaper insurance premium and get a higher upgrade without paying a fortune, a used car is your best option!
Author Bio: Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at firstname.lastname@example.org.