New vs Used: Which car to buy?

There is one ever-grappling question that all automobile enthusiasts are confused about, whether to purchase a brand new or a pre-owned vehicle? This dilemma rings louder with the increasing excise taxes on vehicles in Malaysia. However, the yearning to purchase the latest model when it comes to cars; stays.

There are many new schemes that have been launched for the automobile market’s clientele. With the new all-in downpayment plans and zero percent interest rates, anybody in Malaysia with a steady income can afford a car. However, some are hesitant to pay more for a new model of a hatchback if they can afford a handed-down SUV for the same cost, or maybe even lesser.

We spoke to a few key players in Malaysia’s automobile industry and advisors and will try to guide you through this dilemma. You might not get a definite answer with this, but it will definitely give you an idea of both the options that exist in the market and the advantages and disadvantages that come along the two. We have employed certain important factors for the purpose of this comparison, as follows:

Cost

A secondhand car will offer great value when it comes to the financial aspect, provided that the car is in a good condition and has the relevant specifications. For the same or lesser amount when compared to purchasing a new car, you can get more space, amenities, and a better performing engine.

To give you an example, if you are interested in purchasing a brand new Brio in the latest model, you can get a pre-owned SUV such as the CR-V A/T and save some 3000 ringgits as well!

Another case is you can substitute a second-hand Pajero-2005 for a Base model of Mirage GLX and save 3000 Malaysian Ringgits with the happiness of taking home an SUV!

Maintenance and condition of the car

We will be stating the obvious when we say that a new car wins the battle of car condition. Many experts believe that if a major consideration is your peace of mind, then purchasing a new car is always a better option. This is because there is nothing that has happened to the car without your knowledge. Hence, there is no hidden past of your vehicle that you might not be aware about.

Many second-hand car owners find themselves worried about their unit ever been in an accident or being damaged during a flood. The overarching advantage of new cars is the fact that it comes with a manufacturer’s warranty for 3-5 years, depending on the vehicle. Warranty is an essential part of the car purchasing process since if any part of the car stops during the period, it is replaced at no extra charge.

Ease of purchase and acquisition

Purchasing a new car in Malaysia has become a quicker and easier process, today. We have heard stories of customers heading to a showroom during the day, selecting a car, getting same day loan approval, and driving their new vehicle home before sunset.

Over the last few years, the process to purchase a car has been streamlined a lot. The requirements have also come down to 2 ID Proofs, An employment certificate, bank certificate, and a copy of your latest ITR is all that's required. An income of minimum RM 4,500 is required to get a loan approved for a model of a car such as Honda City or a Jazz.

If you are purchasing your car from a second-hand dealer, it is highly likely that they have links with a few banks to get your loan approved. However, they offer better deals and interests rates to those purchasing a new car.

If you are worried that your salary does not meet this cut, you can always have your spouse, parents or even a friend to be your co-borrower for the loan amount. A co-borrower or a co-maker lends their money by adding to the main debtor’s obligation and makes himself directly responsible for the repayment of the loan. This means that in case the principal borrower fails to repay the loan, the co-maker will pay the amount without owning the vehicle.

If we look at numbers, one can buy a City or a Jazz by paying a small down payment of approximately 3000 Ringgits. Car purchasers generally choose the loan repayment term as 5 year, which makes the monthly instalment a very small.

Depreciation of the car value

This is one of the best advantages of buying a pre-owned car because the previous owner has already taken the thrust of depreciation. As soon as your vehicle steps out of the showroom, its value goes down.

If you were to compare a car and real estate property, one major difference is that the value of the vehicle goes down more each day when it is with you. If you are buying a second-hand vehicle, the depreciation value has already been factored which makes it more lucrative for potential customers.

Insurance

Insurance is a very important aspect, but it should not be fretted about. Many Malaysian companies will offer to cover your car provided that it is not very old. This means that whether your car is new or a second-handed unit, you can insure it at an additional cost. The policy value relies on the value of the car, which will be decided by a representative from the insurance company.

Keep in mind that there are a few insurance companies that are not keen on covering vehicles that are more than 10 years old. This is because the value of any repairs that the car might need can turn out to be more than the premium amount of your insurance. However, a newer model might still be financially viable for the insurance company.

The Final Verdict

At the end of the day, it is your financial situation and preferences that will decide the car model and condition you wish to purchase. However, we would advise you to not flip a coin on this one and carefully read into all the options in front of you and then make a well-calculated and informed decision. So, what will it be? A new car or a second-hand unit?