1. We all know that cars are depreciating assets
Straight up – a car is never an investment. If you want to invest, buy property lah. But, when buying a car, be prepared to lose some money. The only question is, how much?
A brand new car can lose 15 to 30% of its resale value the second you drive it off the lot. And most of the further depreciation happens during the first few years of use. Because of this, the difference in price between a brand-new car and the same model at about five years’ old can be massive.
PRO TIP: This is how people are able to drive cars that seem way above their pay grade! Simply put, you can buy a snazzy five-year-old BMW 3-series for the same price of a brand-new Toyota Vios!
2. You’ll save on repaymentsBalik kampung naik BMW, even if it is five years old, is a legit status symbol. You can bet you’ll be the focus of all the Makcik Bawang at Raya!
However, if showing off isn’t your jam (jangan terasa, ye), a used Proton or Perodua could be a much more affordable option.
You can usually get much more favourable terms on your hire purchase loan for second hand cars. One option is to choose to pay the loan back sooner - say in five years instead of nine. The other is, of course, to just enjoy lower monthly repayments.
If you’re the kiam siap type who has some money stashed away, you may even be able to afford to buy that second hand with COLD HARD CASH! Now, that would be something to show off about.
3. You’ll Spend Less Time and Money on UpkeepOld car = more problems! That’s usually what most people worry about (or use as an excuse) when considering used cars. This may not always be true, especially if you’ve done your homework.
Have you heard of a car being referred to as a “lemon”? No, it’s not a bright yellow vehicle. Lemon is a brand-new car that is hiding serious manufacturing defects. This is always a risk when you purchase new cars. If you’re unlucky enough to have purchased a lemon, be prepared to spend many long, frustrating hours at service centres.
Unlike brand-new cars, it’s easy to avoid buying second hand lemons. Just look into the service history of the car to check for any abnormal maintenance activity.
Furthermore, brand-new cars often have strict servicing schedules which you have to keep at or you’ll be at risk of voiding your warranty. Used cars usually don’t come with warranties. Hence, you can just follow basic maintenance guidelines and avoid wasting your money on unnecessary servicing.
When choosing a second hand car, stick to brands that are known to be reliable over time. Based on 2017 JD Power Malaysia Initial Quality Study, Perodua, Proton, Toyota, Honda and Isuzu are some of the brands that are least problematic. This could mean that you may end up spending less on maintenance for a used Honda compared to, say, a brand-new Volkswagen.
4. Not to mention, you’ll get cheaper insurance rates
Car insurance premiums are calculated based on many factors, and one important factor is the market value of the vehicle. Hence, a cheaper (used) car would automatically translate to cheaper insurance.
SIDE NOTE: Psst – check out Loanstreet’s handy car insurance page for an instant quote and purchase it online right away.
Just make sure that the second hand car you’re planning to buy still has all its safety features in working condition (Hello, PUSPAKOM!). Otherwise, you might end up paying a higher premium.
5. And lastly, you’ll LOSE LESS when you sell itFinally, when it’s time to bid old faithful goodbye, you may even be able to sell it for close to the price that you bought it for. This is because most of the car’s depreciation happens during its early years. A couple of years more in age for an older vehicle will not make much difference to its resale value.
In conclusion, both upfront and in the long run, buying a used car is definitely a better financial decision compared to getting a brand-new one (and don’t worry, you can even buy a “New Car Smell” air freshener for it!). As long as you always keep your car insurance up to date, you’ll be laughing all the way to the bank.