Pros and Cons of Buying a Used or New Car

Buying a new car isn't cheap. And if your budget isn't that big to begin with, then going the alternative "used" car route can be a good option for you. If you have the money, however, then maybe you should opt for a new car, instead. But how will you know which one is good for you? You need to weigh the pros and cons of buying a used or new car and see which one fits your needs, budget, and lifestyle.

So before you buy your dream car, here are some things you need to consider first:

Costs

Used Car

One of the most attractive features of buying a used car is its price tag. These cars are significantly more affordable than brand new vehicles, with some used cars even slashing 70 percent off their original value.

To give you an idea of how much you save when you buy a used car, here's an example for you:

A brand new Toyota Vios currently costs around P852,000 when you buy it straight from the dealer. However, if you currently buy a used Toyota Vios at its real, actual price, you'll see the following differences:

• Toyota Vios 2016: P770,000 = You save P82,000 after a year 
• Toyota Vios 2015: P685,000 =You save P167,000 after 2 years 
• Toyota Vios 2013: P428,000 = You save P424,000 after 4 years 
• Toyota Vios 2012: P320,000 = You save P532,000 after 5 years 
• Toyota Vios 2010: P295,000 = You save P557,000 after 7 years 
• Toyota Vios 2007: P230,000 = You save P622,000 after 10 years 

So after ten years, the P852,000 original price tag of a brand new Toyota Vios would have lost P622,000. That's 73 percent savings on your part.

It's for this reason why some car owners sell their cars when they're relatively still new, because the younger a car is, the more monetary worth it still has. Buyers, on the other hand, buy older cars, since they get cheaper as they grow older.

New Cars

Obviously, new cars are more expensive, since all their parts and components haven't been used by anyone. Nevertheless, there's a psychological and even emotional satisfaction that comes from owning a car that hasn't been driven by anyone.

Depreciation

Used Cars

Depreciation, which means a loss in a car's value over time, is something to take note of. Used cars have an edge when it comes to depreciating value since its original owner would have already absorbed the highest depreciation hits in the first few years of ownership.

So when is the best time to buy a used car? Many experts suggest four- to five- year old cars are the best, since the first three years almost always take the biggest depreciation loss. You'll then see a gradual decline in depreciation value after the fourth and fifth year until they taper off during their eighth to the tenth year of ownership.

New Cars

Did you know that cars do most of their depreciating in the first nine months? And new cars can depreciate as much as 11 percent of its value as soon as you take it out of the car dealer.

So that P815,000 brand new car's monetary worth will be around P725,350 as soon as you drive it straight home.

• After a year, it will have decreased in value by 25 percent, so its value is P611,250
• After three years, it will have decreased in value by 46 percent, lowering it to P440,100
• After five years of ownership, it will have decreased in value by 63 percent, making it P301,550

So in just five years, your brand new car lost more than half of its value already.

Insurance

Used Cars

Note that used cars are subject to approval from insurance companies in the Philippines. Also, chances of getting one goes down if the car you're buying has had many repairs or damages in the past.

New Cars

New cars have a better edge when it comes to insurance. In fact, those with better coverages (such as a Comprehensive Insurance) are almost always included for those who get a car loan--and not just the mandated Third Party Liability Insurance (TPL).

Insurance costs, however, are more costly, especially if you're buying a more expensive car. And your chances of incurring a huge debt is high, especially if you fail to pay your monthly payments regularly. The best way to avoid this is to be diligent when it comes to paying your monthly car fees.

Maintenance and Warranty

Used Cars

Your car can still have warranties, but if you're buying one that's more than three to five years old, then it's highly probable that your warranty coverage has already ended. If this is the case, then there are some dealers that offer warranties / extended warranties to used car owners.

Here's a big disadvantage on your part, though: Aside from the possibility of not getting a warranty from a car dealer, you're also upping the odds of buying a lemon (damaged) car. This is especially true if it doesn't come with a warranty.

You can avoid taking this route by having a good mechanic thoroughly inspect the car before you decide to buy it. Also, make sure to ask the previous owner for a vehicle history report and service maintenance records. These show whether or not they were diligent with their car maintenance and/or repairs.

New Cars

New cars have the advantage of getting an untouched warranty, so you know you can have them repaired without any worries on your part.

Occasionally, some car dealers offer free maintenance services for a specific duration of use or mileage. Take advantage of this, since it will save you a lot on car expenses.

Features & Gadgets

Used Cars

Here's one thing that you can't always do with used cars: be especially picky with the colors, style, features, and options that you'll get. Sadly, there's a limit to your choices, and it would be difficult to meet all your requirements and needs in one car.

Whatever the case, expect to do some hard compromising along the way.

New Cars

The best thing about new cars is that you have more options to choose from. You can choose which features you want in your car, giving you more control over the vehicle you're buying.