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Insurance Article

Why is it Beneficial to Opt for A Second-Hand Car Instead of a New One?

April 03 2019

Opting for a used car facilitates more savings and empowers you to buy a premium model in the same budget

When it comes to buying a car, you need to take a lot of crucial decisions, such as, what will be your budget, the type of car you wish to purchase, the make, model, and colour of the car, and whether you will make the full down-payment upfront or avail the services of a car loan. One such important choice that you need to consider is whether you would like to purchase a new car or opt for a second-hand vehicle.

While purchasing a brand-new car can be an exhilarating thought, opting for a used car has its own advantages. According to the market surveys, the used car sales in India have gone up by 50% during the past one year, mainly due to the entry of organised players in the segment and greater assurance of the vehicle being sold. Read more to know about the benefits of buying a second-hand car instead of new one and how it can be a smart decision for you:

  1. Facilitates affordability and savings

  2. The most specific advantage of opting to purchase a second-hand car instead of new one is that it facilitates more affordability and hence, increases your savings. You can own a pre-owned car of your preferred make and model at a much lesser price when compared with a new car of the same model. For example, you can own a 3-year old Maruti Swift Dezire at an approximate price of Rs.3 to 3.5 lakhs whereas the new car will cost you around Rs. 6 to 8 lakhs, depending upon the variant.

  3. Minimizing the depreciation of your vehicle

  4. The value of a new car starts depreciating from the moment it is driven out of the showroom. Typically, the market value of a car decreases by about 20% per year for the first few years after its purchase. This means that a new car will lose roughly 50% of its value during the first two to three years. You can avoid that hit by buying a second-hand car as it would have already suffered its maximum depreciation by then and will not lose much value in the forthcoming years.

  5. Avoiding the registration fees and other charges

  6. When you buy a new car, you will have to make numerous payments to the Government, such as one-time registration fees, road taxes, and other RTO charges which swells up the on-road price of the vehicle. Opting for a used car is instead a better option to avoid these extra charges as it would have been already paid by the first owner of the vehicle. Hence, you will get full value for your money and you don’t need to shell anything extra out of your pocket to drive your favourite car on roads.

  7. Full assurance and warranty for the vehicle

  8. Some years ago, second-hand cars were considered a ‘junk’. However, the situation has improved vastly during the past two to three years due to the entry of organised players in the market. You will be provided full assurance about the durability of the vehicle and some of the dealers also offer limited warranty on the cars sold by them. The vehicles are also tested thoroughly for the quality and sustainability before being handed over to the customers.

  9. Add-on installations at no extra price

  10. Many vehicle owners install add-ons like a protective film on the windscreens, spoilers, bumper-guards, alloy wheels etc. They not only provide an additional protective layer to the car but also add to its looks and beauty. If you try to install these features in a new car, you will have to shell out a hefty sum of money out of your pocket. On the other hand, you can get a second-hand car with pre-installed accessories at no extra cost.

  11. Reduced rates for car insurance premiums

  12. The motor insurance premiums are calculated on the basis of market value of the vehicle. That is why the insurers charge higher premiums for insuring a brand-new car owing to its high market value. On the flip side, the value of a pre-owned car has undergone a depreciation over the years and hence, you can get it insured at a much lower price by quoting a nominal IDV or Insured Declared Value for the vehicle.

    Apart from contributing towards enhancing your savings, opting for a pre-owned car also augurs well for the environment by reducing the carbon-dioxide output in the atmosphere. Having said that, it’s prudent to take a test drive by yourself or get the car checked by a mechanic thoroughly before buying it to avoid any gremlins in the future.

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