Buying a car, whether brand new or used, could be one of the toughest decision you'll ever make – especially when it's your first car. Questions like, "is it worth it?" or "which is which?" can be the initial thoughts that will enter a buyer's mind.
More so, you may find yourself caught up between the perks of buying a brand new car and the possible disadvantages in comparison to choosing a pre-owned car. So to put things simpler, we have enumerated certain factors you need to know before finalizing your decision. Below are some pros and cons of buying a brand new car.
Value over cost
Obviously, brand new cars cost more compared to the used ones. For similar models, the used unit may cost slightly less than the brand new one. Although prices could be of little difference, one factor that could affect overall cost is the unit's condition. Brand new vehicles are assured to be flawless, while used cars may come with hidden issues or unnoticable blemishes that can affect your car in the long run.
On top of that, brand new cars come with a manufacturer's warranty, which offers useful services such as repairing your vehicle at no cost. An example would be Mazda's Yojin3 Total Care which comes with maintenance services and a bumper-bumper coverage warranty of 3 years or until reaching 100,000 km on the odometer.
Brand new cars are like babies from the showroom. Meaning, buying from a dealership allows you to be the first to own and drive the car. Being the first owner gives a number of perks such as having an interior with a new car scent. Moreover, being the first owner establishes a distinct connection between the car and the owner; creating memories as you go for road trips or any random adventures.
In buying a brand new car, you will never find yourself left with outdated features, especially inauthentic equipment. Plus, buying from a dealer lets you choose from different model variants that offers different entertainment installations inside its cabin.
On the other hand, safety is one of the most essential feature a car has. Most, but not all, brand new cars come with airbags, rear camera, anti-lock braking system, and other features that are up to date. The body construction of modern cars are now safer, which could protect the occupants better should accidents happen.
However, like all things that come in life, buying a brand new car has certain disadvantages along the process. The point where you would apply yourself into careful considerations is when you look at these notable drawbacks you might face in choosing a fresh-from-the-dealer unit.
Right, brand new cars are pricey – one factor which potential car buyers look at. More so, brand new cars quickly depreciates in value. It is said that on an average, a new car can lose up to 15% to 19% of its value in the first year of ownership – although this vary depending of the car's popularity.
This means that a P 700,000 brand new car will more likely be P 567,000 just after a year of possession. In addition, factors like the area, car's condition, mileage, spare part availability, and even the color of your car could alter the resale value of the vehicle.
It is the number 1 less desirable factor of buying a brand new car. Moreover, applying for a car loan would cost even more money on your part. Of note, car loans are paid via amortization. With this, the value of the car you are about to buy will be more expensive than the actual retail price due to interest. For example, an P 800,000 brand new car, which offers a low down payment, could cost more that a million depending on the monthly down payment.
Insurance is more expensive
Car insurance is a contracted policy paid by the car owner in exchange for the insurance company's coverage for damages in accidents or by nature. Relatively, brand new cars have higher insurance tax and fees, which adds up to its overall cost. This is because car insurance varies in relation with the depreciation in the car's overall value.
Of note, the Philippine law mandates all car owners to purchase a Compulsory Third Party Liability (CTPL) insurance policy before the registration or renewal of a vehicle.
Whether you are investing for a brand new car or buying the less expensive used car, it is ideal to analyze the future and long term aspects. More so, the final decision is for you to come up with, these are just insights that can help you decide better.