Buying a car is an investment that needs a person to be prudent and consider all the factors, which may influence the economics of the purchase. Being a big decision, buying a car involves people sifting through a plethora of choices of either purchasing a new or an old car. Investing in either one of the options comes with its own set of pros and cons. This article will help sort these factors and boil them down to a decision that suits you the best.
Depreciation
Depreciation is an inevitable factor. It is the rate of wear and tear of the car as it is being used. An old car’s depreciation is lesser than the one newly released from a showroom. The depreciation rate for a new car rises exponentially in the initial stages before coming to a stable declination, whereas an old car’s wear and tear seems much slower when compared to the alternative.
Maintenance Cost
While wear and tear are inevitable, maintenance depends on various factors such as driving conditions and service periodicity, among others. In addition, a new car’s maintenance cost is easier on your pockets as compared to a used one. So, while the depreciation does outgrow a new car, the maintenance cost of a used car balances things out.
Purchase
It is seldom that a person pays the entire amount at once and buys the car. Most of the customers go for a loan and then make the required transaction. Now, the two options under discussion differ when it comes to a few elements of a loan-based payment. While the insurance costs for an old car are lower as the premium amount decreases with the age of the vehicle, the interest rates for a new purchase are higher.
Miscellaneous Costs
This category involves the costs that are attached to the entire transaction process. This includes costs such as registration fees, road taxes, RTO fees, etc. However, these costs only come in handy when purchasing a new car. Such expenses are omitted if a person is purchasing an old car.
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Driving Proficiency
This particular factor curbs the toggle that the person gets indulged in while he is choosing to opt for an old car or a new one. If someone is buying their first car and is a rookie driver, buying an old car seems a better choice.
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