December 7, 2022
Buying a new car is an exciting experience, even when the car itself might be a little bland. Then again, there’s always the lure of what could be within reach on the used market. It’s a game of trade-offs - pros and cons - but which is the right move? First of all, it’s important to understand the variability of the used market and compare that to the relative security (or predictability) associated with a factory-fresh, showroom condition car. Many people would rather not even have to concern themselves with factors such as vehicle condition, number of owners, or a detailed service history. However, ensuring that you do not make the mistake of buying something riddled with problems, being this fussy is a must when selecting the used car. We won’t dive into all the different ways you can avoid buying a lemon on the pre-owned market, but are here to help you decide if you should go down the new or not-so-new route when buying your next car. New vs Used Car: Availability This one is pretty obvious but well worth mentioning now given how much the global semiconductor shortage has impacted vehicle production and delivery/wait times. The great thing about a used car is that it’s real, it exists, it’s ‘in stock’ whereas a brand new car is most likely to need some wait time for it to be ready for delivery. In 2022, it’s quite rare these days for a dealership to have a large reserve of cars in inventory. At the height of this industry-wide affliction, it’s commonplace to have to wait a minimum of 6 months to a full year before your car is ready for its new home.   New Car Used Car Availability Uncertain Ready stock (actual car) Wait time Weeks, months, even years Virtually none Exposure to supply chain disruption Yes No New vs Used: Vehicle Condition A new car is a new car in the literal sense, as in there should only be a few kilometres on the odometer accrued over the distance it drove from the factory floor where it was assembled to the transporter truck (or from the transporter truck to the showroom delivery bay). There’s an entire universe of variability when it comes to used cars which makes ascertaining its true condition a little tricky. Not counting some unscrupulous measures made to obscure a car in poor health as one with a stellar record, overlooking some important signs could mean the difference between ‘bargain’ and ‘endless money pit’. Unlike what you may have read on other used car classifieds sites or publications, not every car fits the description of “1 careful lady owner”, “accident-free”, and “previous VVIP owner”.   New Car Used Car Exterior New Dependent on previous owner(s) Interior New Dependent on previous owner(s) Wear and tear None Dependent on age, mileage. New vs Used: Car Prices (and Financing) Of course, you’re paying the most for a brand new car. Depreciation only sets in after you, its first owner, drives the car home and it only increases from there. The longer you own it, the less it will be worth over time. This, in contrast, is major appeal of a used car. Having the first owner take the depreciation hit means that you can then own a car you thought was unattainable before at a much reduced price. Granted, it is older, so again choosing the right car based on its condition is crucial. In terms of financing, banks are generally much more inclined to furnish a hire purchase loan with a lower interest rate for new cars since they are much more of a ‘known quantity’: freshly assembled and manufactured under high tolerances and purchased by upstanding individuals seeking a medium-to-long term transportation solution. Used car buyers, like the vehicles themselves, can vary wildly from one who is discerning and responsible to one that is simply looking for the cheapest thing on four wheels within a certain budget. All these and more point to the possibility of less than reliable debtor. Consequently, annual insurance premiums will be higher if nothing else but for the fact that a new car’s insured value is higher, corresponding with its price.   New Car Used Car Price  Higher Lower  Financing Options Yes Yes (under 10/12 years) Loan percentage (Hire Purchase) Higher Lower Interest Rates (Hire Purchase) Lower Higher Insurance (based on value) Higher Lower ‘Upgrade’ Temptation This one really only applies to used cars. When shopping within budget for a new car, for example a B-segment sedan such as a Honda City, there’s always that temptation to see what else you can get for the same amount of money on the used market. In this case, you could easily find slightly older (perhaps a even previous generation) Honda Civic or a vehicle similarly in a larger size bracket or prestige level - such as a new Honda City to a used Volkswagen Vento. You could spend hours poring through endless classifieds and the different pre-owned options available for a modest amount of money. Dig deep enough you’ll definitely be shocked at what you find. New vs Used: Car Maintenance Unfortunately, the freedom to send your car to any of the thousands of independent workshops across the country for servicing or repair is not really an option for a new car buyer provided said car is still covered under warranty. At the risk of voiding that important manufacturer-backed warranty, these brands insist on having all mechanical and electronic components checked, replaced, or fixed at their network of dealer-operated service centres. Fortunately, more and more automakers are adopting the practice of including free servicing during the warranty coverage period, though others leave their customers at the mercy of these 3S centre’s billing department. More autonomy is afforded to the used car buyer, then, who can shop around for the best workshop based on reputation, service quality, and/or pricing, as well as location and convenience. The new car buyer might not be burdened by choice, but is more or less shackled to the dealer network for maintenance and repairs.   New Car Used Car Servicing Dealer, 3S Centre Owner’s choice Location Dealer network Anywhere Price Negotiation None (or very limited) Possible, Expected New vs Used: Car Warranty We touched on this in the above few paragraphs but its importance on a typical buyer’s purchase decision cannot be overestimated - some even jump to an unfamiliar brand of vehicle if their warranty package is sufficiently compelling. The standard duration is rising from 3 years to a point where automakers are pressured by the industry and the customer base alike to offer no less than a 5-year warranty. It might not seem overly necessary to some given the fact that a brand new car (from a reputable automaker) isn’t too likely to experience a long list of issues, but like insurance, you’ll be extremely glad it’s there in the event you do need it. As you may know, a manufacturer-backed warranty can be expected to cover the labour, replacement and repair of a very large majority of damage or malfunction encountered with the vehicle under the circumstances of ‘normal use’. Basically, if you ‘didn’t do it’ with regard to something breaking down, you’re likely going to be covered by the warranty. On the other hand, a used car doesn’t have a warranty. However, most new car warranty policies are transferrable and tied to the car and not the legal owner. Should you buy one that has had its manufacturer warranty elapse, you’re more or less on your own. That said, there are 3rd party warranty providers such as longtime Carlist.my partners Warranty Smart that offer coverage on many vehicles for a reasonable annual fee. New vs Used: A Summary In our opinion, there is definitely a case to be made for either a new car or a used car, both paths have their advantages and disadvantages, which on balance favours either type as illustrated below:   New Car Used Car Availability ✘ ✓ Vehicle Condition ✓ ✘ Price ✘ ✓ Maintenance ✘ ✓ Warranty ✓ ✘ We definitely cannot fault anyone for choosing a new car for the more carefree, less involved ownership experience nor can we knock anyone for choosing the price appeal of a used car over some loss of certainty over its past. It really does come down to your own preferences, priorities, and what type of car buyer you are. If you think a used car is the right choice for you, check out quality used cars on Carlist.my & Carsome.

Buying a new car is an exciting experience, even when the car itself might be a little bland. Then again, there’s always the lure of what could be within reach on the used market. It’s a game of trade-offs – pros and cons – but which is the right move?

First of all, it’s important to understand the variability of the used market and compare that to the relative security (or predictability) associated with a factory-fresh, showroom condition car.

Many people would rather not even have to concern themselves with factors such as vehicle condition, number of owners, or a detailed service history. However, ensuring that you do not make the mistake of buying something riddled with problems, being this fussy is a must when selecting the used car.

We won’t dive into all the different ways you can avoid buying a lemon on the pre-owned market, but are here to help you decide if you should go down the new or not-so-new route when buying your next car.

New vs Used Car: Availability

This one is pretty obvious but well worth mentioning now given how much the global semiconductor shortage has impacted vehicle production and delivery/wait times.

The great thing about a used car is that it’s real, it exists, it’s ‘in stock’ whereas a brand new car is most likely to need some wait time for it to be ready for delivery. In 2022, it’s quite rare these days for a dealership to have a large reserve of cars in inventory.

At the height of this industry-wide affliction, it’s commonplace to have to wait a minimum of 6 months to a full year before your car is ready for its new home.

 

New Car

Used Car

Availability

Uncertain

Ready stock (actual car)

Wait time

Weeks, months, even years

Virtually none

Exposure to supply chain disruption

Yes

No

New vs Used: Vehicle Condition

A new car is a new car in the literal sense, as in there should only be a few kilometres on the odometer accrued over the distance it drove from the factory floor where it was assembled to the transporter truck (or from the transporter truck to the showroom delivery bay).

There’s an entire universe of variability when it comes to used cars which makes ascertaining its true condition a little tricky. Not counting some unscrupulous measures made to obscure a car in poor health as one with a stellar record, overlooking some important signs could mean the difference between ‘bargain’ and ‘endless money pit’.

Unlike what you may have read on other used car classifieds sites or publications, not every car fits the description of “1 careful lady owner”, “accident-free”, and “previous VVIP owner”.

 

New Car

Used Car

Exterior

New

Dependent on previous owner(s)

Interior

New

Dependent on previous owner(s)

Wear and tear

None

Dependent on age, mileage.

New vs Used: Car Prices (and Financing)

Of course, you’re paying the most for a brand new car. Depreciation only sets in after you, its first owner, drives the car home and it only increases from there. The longer you own it, the less it will be worth over time.

This, in contrast, is major appeal of a used car. Having the first owner take the depreciation hit means that you can then own a car you thought was unattainable before at a much reduced price. Granted, it is older, so again choosing the right car based on its condition is crucial.

In terms of financing, banks are generally much more inclined to furnish a hire purchase loan with a lower interest rate for new cars since they are much more of a ‘known quantity’: freshly assembled and manufactured under high tolerances and purchased by upstanding individuals seeking a medium-to-long term transportation solution.

Used car buyers, like the vehicles themselves, can vary wildly from one who is discerning and responsible to one that is simply looking for the cheapest thing on four wheels within a certain budget. All these and more point to the possibility of less than reliable debtor.

Consequently, annual insurance premiums will be higher if nothing else but for the fact that a new car’s insured value is higher, corresponding with its price.

 

New Car

Used Car

Price 

Higher

Lower 

Financing Options

Yes

Yes (under 10/12 years)

Loan percentage (Hire Purchase)

Higher

Lower

Interest Rates (Hire Purchase)

Lower

Higher

Insurance (based on value)

Higher

Lower

‘Upgrade’ Temptation

This one really only applies to used cars. When shopping within budget for a new car, for example a B-segment sedan such as a Honda City, there’s always that temptation to see what else you can get for the same amount of money on the used market.

In this case, you could easily find slightly older (perhaps a even previous generation) Honda Civic or a vehicle similarly in a larger size bracket or prestige level – such as a new Honda City to a used Volkswagen Vento.

You could spend hours poring through endless classifieds and the different pre-owned options available for a modest amount of money. Dig deep enough you’ll definitely be shocked at what you find.

New vs Used: Car Maintenance

Unfortunately, the freedom to send your car to any of the thousands of independent workshops across the country for servicing or repair is not really an option for a new car buyer provided said car is still covered under warranty.

At the risk of voiding that important manufacturer-backed warranty, these brands insist on having all mechanical and electronic components checked, replaced, or fixed at their network of dealer-operated service centres.

Fortunately, more and more automakers are adopting the practice of including free servicing during the warranty coverage period, though others leave their customers at the mercy of these 3S centre’s billing department.

More autonomy is afforded to the used car buyer, then, who can shop around for the best workshop based on reputation, service quality, and/or pricing, as well as location and convenience. The new car buyer might not be burdened by choice, but is more or less shackled to the dealer network for maintenance and repairs.

 

New Car

Used Car

Servicing

Dealer, 3S Centre

Owner’s choice

Location

Dealer network

Anywhere

Price Negotiation

None (or very limited)

Possible, Expected

New vs Used: Car Warranty

We touched on this in the above few paragraphs but its importance on a typical buyer’s purchase decision cannot be overestimated – some even jump to an unfamiliar brand of vehicle if their warranty package is sufficiently compelling.

The standard duration is rising from 3 years to a point where automakers are pressured by the industry and the customer base alike to offer no less than a 5-year warranty.

It might not seem overly necessary to some given the fact that a brand new car (from a reputable automaker) isn’t too likely to experience a long list of issues, but like insurance, you’ll be extremely glad it’s there in the event you do need it.

As you may know, a manufacturer-backed warranty can be expected to cover the labour, replacement and repair of a very large majority of damage or malfunction encountered with the vehicle under the circumstances of ‘normal use’.

Basically, if you ‘didn’t do it’ with regard to something breaking down, you’re likely going to be covered by the warranty.

On the other hand, a used car doesn’t have a warranty. However, most new car warranty policies are transferrable and tied to the car and not the legal owner. Should you buy one that has had its manufacturer warranty elapse, you’re more or less on your own.

That said, there are 3rd party warranty providers such as longtime Carlist.my partners Warranty Smart that offer coverage on many vehicles for a reasonable annual fee.

New vs Used: A Summary

In our opinion, there is definitely a case to be made for either a new car or a used car, both paths have their advantages and disadvantages, which on balance favours either type as illustrated below:

 

New Car

Used Car

Availability

Vehicle Condition

Price

Maintenance

Warranty

We definitely cannot fault anyone for choosing a new car for the more carefree, less involved ownership experience nor can we knock anyone for choosing the price appeal of a used car over some loss of certainty over its past.

It really does come down to your own preferences, priorities, and what type of car buyer you are.

If you think a used car is the right choice for you, check out quality used cars on Carlist.my & Carsome.

Leave a Reply

Your email address will not be published. Required fields are marked *

Generated by Feedzy
Language