Buying a brand-new car from the showroom is always an enticing prospect until you realize how bad depreciation hits you. Here is why buying a lightly used car is a better option.
With social distancing quickly becoming the norm due to the Covid-19 pandemic, there has been a rise in demand for buying personal vehicles. While this has helped the auto industry recover from the pandemic and the resulting lockdown, it has also led to huge waiting periods for popular models as a byproduct. Bestsellers like the Maruti Wagon R, Swift, and the Hyundai i20 currently have waiting periods of up to 6 months. While automakers have been trying to meet this increased demand with increased production, the waiting periods are still considerable. This may lead to buyers getting frustrated, and look at the used car market instead. Traditionally buying a used car makes more sense, and now with the new rise in demand for new cars, you can skip the waiting period entirely with a used car. Today we take a look at some of the benefits of buying a used car.
Buying a used car is usually much cheaper than buying a brand-new vehicle. Cars are depreciating assets, i.e., the moment they are purchased, they lost their original value. This means that when a buyer purchases a sparingly used and not very old car, they can get a good value-for-money deal. If a brand-new car costs Rs 12 lakh, you can buy the same vehicle after a few months with some kilometres on the odometer for less than Rs 11 lakh.
You Can Get Better Options
If you have a fixed budget for buying a new car, you can get options from a segment or two above in the used car market for the same price. For the same budget to buy a hatchback, you can easily purchase a well-maintained sedan or SUV. Even though they are not brand new, the used car options will come with better features, interior, creature comforts, and safety.
Lower Depreciation Levels
As we mentioned, a car is a depreciating asset. From the moment a car leaves the showroom floor, it starts losing money, with most cars depreciating up to 30% within the first year itself. This means if you by a car worth Rs 15 lakh, within the first year it loses Rs 4.5 lakh from its value. If you buy a car from the used car market for the same price, it will be valued at Rs 12.75 lakh after the first year as depreciating slows down to 10-15% after the first year.
Finance Schemes Are Easier
Nowadays most auto manufacturers have in-house used car divisions, and a rising number of banks are providing easy loans for buying used cars. Since there has been a rise in demand for used cars, banks are providing zero downpayment options as well as low EMI dues. You can contact your bank for further details.
Probably the biggest mental block when buying a used car is going to be the reliability. But as most new car buyers end up buying ‘extended warranty’ in the first place, you can benefit from this as well if you buy your used car which is only 1 and half years old or so. Also, with the help of digitization, it is fairly easy to get the service history of a used car.
These were some of the many benefits of buying a used car instead of a new one, and now buying one makes even more sense with the long waiting periods for a new car.