There are numerous aspects to take into consideration while purchasing a car – the main being should you buy a new or a used car. If you are trying to manage your finances wisely, opting for a pre-owned car would be a wise decision. Though the idea of purchasing a new car may sound tempting, the quick rate of depreciation, higher price, and greater insurance, among others, do not work in the favor of new cars.
Given that there are numerous dealerships selling reliable and good condition pre-owned cars, you may opt for them. Following are five smart reasons to buy a second-hand car.
1. Value for money
Pre-owned cars come with a lower price tag and offer a much better value for the amount paid. You may compare numerous models from various used car dealerships, and select the model based on your needs. While doing so, compare the quoted rates and choose the dealer offering the best rate for the car. If you are making the purchase from a private seller, you may get a better price – given that there is no commission to be paid to middlemen. In order to finance your used car purchase, you may borrow a vehicle loan, and drive home the car of your dreams.
2. Slow rate of depreciation
A huge disadvantage of purchasing a new car is that its value depreciates the moment it is driven out of the showroom. The market value of the car decreases at a very rapid pace in the early years of the car. Hence, you may avoid this huge depreciation hit by opting for a pre-owned vehicle. Though a used car will depreciate, you will lose money less quickly.
3. Lower insurance and registration charges
The rate of insurance is generally based on the age of the car. Newer the vehicle, higher is the cost towards insurance and vice versa. The rate of insurance for pre-owned vehicles is therefore lower. Besides insurance, you also have to pay a lower amount towards registration fees. As the cost of registration is based on the transaction price of the car, buying a used car reduces the cost of registration.
4. Higher inflation
Given that the rate of inflation is increasing, consumers have to bear the brunt as the high cost is passed on to them. Automobile manufacturers quote a higher price for new models. In order to be protected against such rising prices, purchasing a used car is a safer option.
5. Lower loan amount to be borrowed
As used cars come with a lower price tag, the amount you may have to borrow will be lower. Many financial institutes offer used car loans with higher borrowing amount and attractive interest rates. Competitive interest rates indicate that a lower amount has to be repaid towards Equated Monthly Installments (EMIs). You may choose to borrow a used car loan and buy a pre-owned car without any financial difficulties. Given that cars are now needed for everyday travel, investing in a pre-owned car is a wise decision.