The first step in your journey is to decide whether you want to purchase a new or used car. Most prospective car buyers have a good idea of which route they want to go, but for those who are still undecided, the following section should help you figure out which option is best for you.
New car prices have risen in the Philippines as a result of higher excise taxes imposed by the TRAIN or tax reform law. And, with a global pandemic affecting everyone’s financial capacity, deciding between a new or used car has never been easier.
As a result, used car dealers anticipate that more Filipinos would turn to the used automobile market in the coming three to four years. It makes sense if you’re on a tight budget, you might as well stick to the most economical solutions.
Used cars are clearly the less expensive option, but is it really wise to buy a used car rather than a new one? Is it the other way around, or vice versa? The best option differs from one car buyer to the next.
The Benefits and Drawbacks of Purchasing a New Car
If you plan to finance your purchase with a vehicle loan, buying a brand new car is a no-brainer. New car loan terms are usually better than used car loan terms, especially for newer models.
Most auto dealerships provide flexible financing options with low-interest rates, which is something that not all used vehicle dealerships can provide.
If you’re in a hurry, buying a new car is also the best option. You won’t have to do nearly as much research or legwork as if you were buying a used automobile. Simply go to a showroom near you and choose an in-stock model or order one with the features you want.
A sales representative will always be happy to help you if you have any questions, especially if they sense a sale coming up. New automobiles also come with a manufacturer’s guarantee, which ensures that any significant repairs on your vehicle will be covered by the manufacturer for the following several years.
This is especially true in the Philippines, where unscrupulous mechanics are all too willing to take advantage. If you don’t know the difference between a carburetor and a transmission, you might as well buy a brand new car to avoid having to deal with them.
New cars are also, on average, more fuel-efficient, allowing you to save more money in the long run.
Buying a new car is a terrific option for the reasons stated above, but it is not without its drawbacks.
The biggest disadvantage of this approach is that brand new cars degrade at a considerably higher pace than secondhand cars. Few things depreciate more quickly than a brand new car, which loses 10% of its value the instant you drive it off the lot.
It doesn’t end there, though.
After five years, the average depreciation rate for new cars is 63 percent – and that’s only if you take good care of it. If you’re the type of driver who likes to push his or her car to its limits, you may expect your car’s value to plummet even faster over time.
Reselling brand new cars can be difficult due to how quickly their value depreciates. How many people will want a car that is two or three years old and has already lost half its value?
If you intend to resell your brand new car within five years, you may be surprised at how much more it will cost you once depreciation costs are factored in.
Full insurance coverage is also required for financing a brand new car, and it can quickly become prohibitively expensive. The amount you pay in premiums is determined by a number of factors, but you should expect it to be higher the newer the vehicle is.
The Benefits and Drawbacks of Purchasing a Second-hand Car
As previously stated, depreciation is a significant disadvantage of purchasing a brand new car. If you buy a used car, you won’t have to worry about that because the previous owner has already paid for it.
When it comes to buying used cars, depreciation is your best friend.
Wait a few years if you want a brand new car model that you can’t afford; its price will drop over time, especially if it’s a more popular model. Because such cars think Toyota Vios or Honda Civics are so common on the used market, you’ll have an easier time finding one that’s right for you.
Furthermore, while the value of a new car drops almost as soon as you sign the papers, the value of a used car can be maintained or even increased if you take good care of it, making reselling a much more appealing option down the road.
A used car is also far less expensive than a new car, resulting in cheaper monthly payments and insurance costs.
It’s worth noting, however, that insurance companies frequently reject applications for vehicles older than ten years. Most of the time, you can still get insurance for cars that are old; it just takes a little more effort on your part.
Read also: Buying a Used Car: Thing to Think About
Used cars are pre-owned vehicles by definition, they may not always be in the best condition.
They may have technical issues that were concealed before you purchased them; they may also require repairs that were never completed, and some parts may be missing entirely. You won’t know unless you take it for a test drive or have a trusted mechanic inspect it for you.
When you buy a used car from an authorized dealership rather than a private seller, you are less likely to have such problems.
Dealership-sold used cars should come with some sort of guarantee that protects you from such issues, so you won’t have to worry as much. Of course, this peace of mind will come at a price.
Buying a used car from a private seller becomes more appealing if you have a trusted mechanic or know your way around an engine.
Which is the best option for you?
Purchasing a car is a significant financial commitment for most people. Your car, aside from your home, is most likely the largest single purchase you’ll ever make.
You could be haunted for years if you make the incorrect option. As a result, we recognize the importance of getting it right the first time.
While we wish we could give you a straightforward answer, the truth is that there is no such thing as a “one-size-fits-all” solution, as the ideal car varies depending on your lifestyle and demands.
In terms of reliability, build quality, and gas mileage, new cars are much superior to old or used cars if you don’t mind spending a little more. You also get a strong warranty and a dealer who is obligated to assist you if the car breaks down.
Going with a brand new car will also save you a lot of time. Simply go to any dealership and choose from a large selection of new vehicles.
Agents will patiently go through all of the characteristics of each automobile with you and even let you test drive them.
Buying a used car, on the other hand, is much less expensive than purchasing a new car. You’ll also have more options because there are more cars available, including older models that aren’t available at new car dealerships.
Second-hand automobiles are a wonderful option if you know a lot about cars or have someone in your corner who does because you’ll be able to assess a used car’s condition and identify any flaws before you buy it.