Saturday, 10 July 2010

New versus second-hand car

WHEN it comes to purchasing a car, one is often confronted with one main decision – whether to buy a brand new or second-hand car.

Each one has its own pull-and-push factors but ultimately, the potential buyer needs to decide what best suits his needs. How much is the potential buyer willing to spend? Is the buyer facing budget constraints? Is the buyer stretching the finances all for the sake of a brand new wheel?

Clearly, if you’ve got a limited or tight budget, then purchasing a used vehicle would be a preferred option. However, even if it cuts your cost by half compared to buying a new car, used vehicles are not risk-free.

Driving a new car gives you more peace of mind.
 
First, you won’t really know the extent of the car’s wear and tear. The appearance of the car is rarely a good gauge, as a neat-looking, 10-year-old jalopy could just be firing on one-and-a half cylinders, be up for a transmission overhaul and be a ticking time bomb on wheels.

As such, a used vehicle may require higher maintenance and expensive repairs compared with a new one. What’s more, such repairs won’t be covered by warranty.

Apart from being costlier than its old-aged counter part, owners of new cars can relish in the fact that their vehicles are unlikely to unexpectedly break down in the middle of nowhere for no apparent reason, says Kay Vee Auto car salesman Johnson Low of Petaling Jaya.

“A new car is covered by warranty, so even if you have problems within the (warranty) period, it can be fixed without any additional costs because its their (manufacturers/distributors) responsibility.”

Low noted that many luxury cars especially, offered vehicles with warranties that extended to as long as five years.

“Also, new cars won’t need new parts for a long time. A used car on the other hand may need a lot of things that need changing.”

Low also pointed out that in the case of a break down for new vehicles, many car manufacturers offered towing assistance.

“Basically, driving a new car gives you more peace of mind compared with a used one. Furthermore, one also tends to look good driving a brand new vehicle that just hit the market rather than one that’s been defunct for years,” he says.

Another advantage of a newer car is that it would command a slightly better resale value versus an older model,” Low adds.

Buying a used car

The immediate benefit of buying a used car is that it’s cheaper than a brand new one. Furthermore, a used car also depreciates a lot lesser than a new one.

“New cars lose about 30% to 50% of their value within the first three to four years, at which point the depreciation starts to slow down,” says Used Autos Sdn Bhd owner Peter Wong, a Segamat-based used car dealer.

“In the case of used cars, the previous owner would have absorbed the largest portion of the depreciation cycle. By the time you purchase a used car, nearly all of the costs of owning and operating the car would have been reduced,” he adds.

Jeremy Yeoh, a Kuala Lumpur-based used car dealer says that owning a used car also means lower financing costs, reduced registration and license fees as well as insurance premiums.

According to him, cheaper, fuel efficient cars tend to have better resale value, such as Perodua Kelisa, Kancil and Toyota Vios models.

“Each year, there are new drivers coming onto our roads, and these are mostly students who are often incomeless; it’s their parents who buy them their first cars, mostly used cars that aren’t too expensive.”
Yeoh adds that many people with multiple cars tend to go for used models as an alternate or second household vehicle.

By EUGENE MAHALINGAM
eugenicz@thestar.com.my

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