Many people would tell you; especially those who care dearly for you, to get a new car and forget the notion of buying a second-hand one. Those folks have primarily one thought on their minds and that is your safety. But does buying a used car mean that it will be bare of all safety features and you will be literally running it? When the general public discusses cars, women would often recommend a new vehicle that looks nice from the outside with a little mention to the car’s basic features while men would dissect the car into pieces and try to find faults that even the original manufacturer did not think of! (This is the general rule depicted from our reality and by no means are we trying to hint at anything tasteless).
The below will pinpoint the major differences between new and used cars with all intentions of helping you in your car purchase.
Value Difference between New and Used Cars
The case with a new car is that the second you drive it off the parking lot generally means it loses at least 15-20% in value! There is no other major purchase that depreciates as quickly as a new car. During the first three years of ownership, new cars lose about 40% of their value. After that, the depreciation starts to decelerate. If you decide to buy a 2 to 3 year-old used car, it will offer you almost a one-third reduction in the cost as the former owner will have absorbed the biggest loss of the depreciation cycle.
For example, brand new cars can cost between AED 40,000 ($11,000) to AED 200,000 ($55,000), while second hand cars can start as low as AED 8,000 (2,200). Ultimately, the decision to buy new or used comes down to what you can afford and what will give you peace of mind.
Benefits of Both
You can guarantee that a new car will come your way without a single scratch with perfect condition; of course, you will be excited as a 4-year old (the difference here is that you won’t show it as one, though there’s no harm in it if you do). The sparkling new car will come with low maintenance costs, high reliability and a full warranty. The features can be customized according to your needs and your budget. In addition to the slow depreciation cycle, the used car will come with lower purchase price and monthly payments. The insurance premiums, registration and license fees, which are normally tied to the cost of the car, will be low as well.
Loans for the Non-Cash-Paying Population
If you are getting a car loan to finance your new car, you are going to be paying for sure more than the car is worth. The depreciation on your new car means that you will be paying extra for four or more years on a car that is worth only half of what you paid for it. However, not all cars lose value at the same rate. Some cars will maintain their values such as the German cars better than common cars such as Korean. Banks would often offer lower car loans for new automobiles as opposed to used ones. The difference usually is between 1-3%, which is only a few thousand dirhams in loan savings and a lot less than you would save by buying a used car instead.
There are several resources over the Internet that would help you compare depreciation rates on the cars you are interested in buying as you won’t be getting these answers from a car dealer.