top of page
  • Basis

Should you buy a second-hand car?

Updated: Jan 30, 2020

While there’s no hard-n-fast rule to a choice like this, buying any car needs a lot of well-researched information. Try asking yourself the following questions before you choose to buy a car (new or previously owned), and hopefully, you’ll have your answer!

• Is it an emotional buy? Or an essential buy?

Buying a new car is usually linked to success, pride, and self-esteem. The concept of “Mere paas Gaadi hai, Bangla hai, naukar-chakar hai… “ has been ingrained in us for years, and it’s truly hard to move away from it.

However, cars are not an investment. Buying a new car means there will be an immediate depreciating value – with about a 20% decline, the moment it hits the road. So, if it’s an emotional buy that will only add to your social stature, think about second-hand luxury buys as an upgrade. You could get a 2016 BMW 3 Series for about ₹35-40 lakhs, somewhere around the price of say, a Skoda Kodiaq or a Volkswagen Passat (approximate estimates*). And when you buy such classics, you will barely have any issues with the engine or design with a couple-of-years-old car.

But if you want a car solely to commute and need-based usage, functional uses, a well-maintained second-hand car can be a good choice with the availability of CPOs (Certified Pre-Owned companies) that examine previously-owned cars on standardized and public platforms.

• How much will your car be driven?

Most of us tend to neglect the daily use of our car while thinking about the buy. There are many factors that are relevant to the usage of the car including mileage, petrol/diesel, automatic or stick, and most importantly, maintenance. Will you drive in jam-packed traffic, or will you need a car that will be an easy drive for mountainous terrain?

If you are looking for a good car to drive to work and back every day through traffic, and you don’t see any extra use to it, you should go for a previously-owned, running, well-maintained car. A new car, though, is quite essential if you have a very specific use for it – say you need to drive around your business clients in it, or if your sole purpose to take trips on different terrains.

• What is your budget?

Used cars are much cheaper – in terms of cost, low depreciating rates, and cheaper insurances. EMI for buying a car, for used cars is slightly higher Although advisers suggest keeping aside a bit of extra cash for used cars to get them in shape.

When you re-sell a second-hand car, you will get a better price than say renting one, which is anyway more expensive in the long run. Whether it’s a luxury car or a standard one, a well-in-shape second-hand car is a good bet financially as well as practically. If you’re worried about the condition of the car, and how much would it cost for the initial repairs, we would advise you to get the car inspected by a mechanic that you trust.

However, if you still if you want a brand-new car that you have your heart set on, there’s always the option of renting it. As it costs extra over the long term, you have the option of changing it to a newer model before it starts pinching your pocket!

To learn more about money management, discuss all things money with a community of financially independent women and get personalised guided investing, sign-up for Basis now. India’s only personal finance platform focussed on women.

#CarBuy #SavingMoney

bottom of page