Advantages of buying used cars compared to new cars
The time of getting yourself a car has arrived, depending on your budget and the kind of car you have always wanted, you are now trying to decide whether to put your money into a new or a used car. While buying an old car can save you thousands upfront, buying a new car has its advantages.
However, before you are enticed by the feel of a new car, start by evaluating how much you will be saving by buying a used car instead. The average person in Kenya owns about 6cars in their life time, if each of these cars are about 3year old, you can calculate how much you will be able to save on each car purchase.
How Depreciation can save you money
Depreciation has been used in negative light but when it comes to buying a car, it is the real money saver. Understanding how car depreciation work equals to figuring out car buying’s secrets. A car loses 20% of its value the moment you buy it, after a year of mileage, wear and tear, it loses about 10%, and this is barely noticeable until the day you decide to trade in or sell your car.
Let’s take a look at two similar vehicles, a new car and a used car.
New Car Depreciation– A new car loses around 30% of its value after one year. If you bought the car at Ksh 3m and sold it 3 years later for Ksh 1.5m, the car will cost you Ksh 1.5m in depreciation.
Old Car Depreciation– On the other hand, if you had bought the same car but three years old at Ksh 1.5m, you can sell the same car after a 3 year period for Ksh 1m at a deprecation cost of Ksh 500000.
Driving a new car feels terrific but it will cost more in the long run. Of course there are stigmas surrounding buying used cars but that shouldn’t stop you from saving a huge amount of money.
Advantages of buying used cars
Vehicles are now more dependable than ever before in two ways;
Maintenance– One can drive today’s cars for longer periods in between regular maintenance like oil change, brake jobs or tire rotation. Tires and brake pads last longer in today’s car than earlier versions.
Reliability– Today’s cars can deliver up to 100,000miles without requiring any major repairs hence you will not be buying someone’s problem according to common misconceptions.
Lower car insurance rates– A car’s value determines the insurance rates especially collision and comprehensive coverage, the less the car’s worth, the less it will cost to insure.
Cheaper Registration– The cost of registry renewals/ registering a used car lowers each year.
Less stress– We all spend more time paying attention to a new car, the first dent on a new car is likely to give you more headache compared to a dent in an old car
Get a Luxury car– Buying a used car saves you enough more to buy a more luxurious car than a cheaper new one.
Advantages of buying a new car
Buying used cars has one great benefit of saving you money, however buying a new car has its perks.
Better financing options– Auto and Logbook loans lenders offers better interest rates on new car loans or car buying incentives like Import Duty Financing.
Shopping is easier– Compared to buying used cars, new-car shopping is easier. All new cars are assumed to be in perfect condition and do not require being taken to a mechanic.
Advanced Features– New cars has enhanced technology for better performance, safety, and comfort, a feature obviously that lucks in old cars.
Prestige– New cars gains you respect and envy from peers, it is hard boasting of buying an old vehicle.
Peace of Mind- A new car comes with a warranty of up to 3 years or 30000 miles, it’s also more reliable than a used one.
So, New or Used
There are times when purchasing an old vehicle will not cost more than buying a 2 year old vehicle. This is because not all car brands depreciate at the same speed. Some brands maintain their value well for longer periods of time.
Depreciation can be your dirty little car buying secret. If going for a used car, go for one that can hold its value, this will minimize any effects. If you are not still sure, use a car loan calculator to see the difference if you choose to buy a new one instead.