One of the biggest financial milestones of an adult’s life is buying a car.
If you are about to achieve this milestone, you may have browsed through hundreds of auto magazines, seen countless ads and done your research to know what you want.
But wait, take a step back — is buying a new car right for you?
Sure, it will have a peculiar yet attractive new car smell (you know what we are talking about), and it will be shiny, but there are many drawbacks as well.
Think of the tremendous financial strain it will have on your bank account, especially if it is the beginning of your career.
What’s the other option you have?
You might have a mental picture of a used car as being a shabby, worn-out car with bumps and scratches.
But these days, that’s not the case. There are plenty of good deals if you want to buy a used car, one that almost ‘looks like new.’
Also Read: 9 business lessons from car salespersons
A used car costs a great deal less and also has a lot of other great advantages. There are many factors other than price that factor in the new vs. used car debate.
Advantages of Buying a Used Car Over Buying a New Car.
- Buying a used car is better for the environment
A vehicle produces a lot of carbon dioxide when it is manufactured and shipped.
You’re cutting down on your carbon footprint when you buy a used car.
Plus, hybrid vehicles that use lithium-ion, lead-acid, other batteries have a worse impact on the environment as compared to the older ones.
- You need to pay minimal or no sales tax
When you buy a shiny new ride, you have to pay a sales tax. This is generally glossed over by advertisements and car showrooms.
In contrast, you don’t need to pay any tax when you buy a used car.
Your used car won’t depreciate much further
A new car is a commodity, but it starts depreciating as soon as you drive it off from the showroom. With used vehicles, the bulk of the depreciation has already occurred.
Your used car will have lower customization costs
You don’t have to buy additional expensive add-ons for your car that might seem necessary for a new car.
Your used car will have no hidden costs
A new car comes with many hidden costs that pop up just before you buy it. You might need to pay fees like shipping charges, etc. A used car will have no such costs.
Your used car will have lower insurance premiums
A used car will have a lower insurance premium because it has already depreciated in value, even though it might be running smoothly.
Your used car will be certified and thoroughly inspected
Certified pre-owned vehicles are thoroughly inspected to make sure you are getting a smooth-running car.
So if you’re thinking of buying a car, consider the advantages of buying a new vs. used car, and then make the right financial decision.
About the Author:
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at email@example.com.