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Buying a Used Car v/s New Car

Regular product launches, frequent model updates and easy access to financing have created an abundance of used cars in the Indian automotive market. We have seen some tempting propositions that would be better described as “pre-worshipped” rather than "pre-owned". Product quality in this market is much higher than ever before and a good find will offer incredible value for your money. has studied the pros and cons of buying a pre-owned car and now shows you why it’s worth a second look.


More car for your money: OR Same car for lot less money. Depreciation of value accounts for the major cost of owning a car – why not let someone else take the hit? For the price of a new car you can bring home a well-maintained pre-owned car from a much higher segment. Sedans from segments C and D lose as much as 40% of their value in the first year alone. A one-year old Skoda Octavia RS, which retails new for almost Rs.15, 00,000, can be had for about Rs.9, 50,000 – little more than more than the price of a new Honda City Vtec.

• Reliability: Gone are the days of used cars needing regular trips to the mechanic. With most cars on the market today, long-term reliability is part of the package. Japanese manufacturers typically rule the roost in this area and offer reliable performance for at least 200 000 km, if properly maintained. A well-maintained sedan with 40 000 km on the odometer can be considered a virgin.

• Certified pre-owned cars: Certain authorized dealerships now offer certified pre-owned cars. While these cars carry a premium on their price tags, they are put through an exhaustive inspection and change of parts to ensure a near-new car experience. Some certified pre-owned cars are also cosmetically improved by the dealer.

• Extended warranties: If the pre-owned car you are looking at is only a year or two old, odds are that you can take advantage of an extended warranty. There are two types of extended warranties: those that cover almost all components (like a new car warranty), and others that warrant only the engine and transmission.

• Financing availability: Financing is now available for used cars, though your financial institution may have restrictions on the model vintage.


• Less depreciation: If you are a business owner, the taxable benefits of depreciation are likely to be important to you. Used cars depreciate less than new cars and consequently offer fewer tax write-offs.

• Not the latest: The best deals to be had are often on cars that are a generation or two old, such as older Honda Accords, Toyota Qualis, and Maruti Zens. Of course, there are also some good deals available for current generations.

• Higher interest rates:
The interest rates on used car loans are significantly higher than on financing for new cars. Potential customers generally buy pre-owned cars with cash. On the bright side, if you or your family has invested in fixed deposits, you are in luck. Taking a loan against fixed deposits leads to very lucrative interest rates, minimal paperwork (if at all) and flexible repayment plans. Click here (Car Loan against Fixed Deposits) to read the full discussion on this subject.

• Car history: Pre-owned cars may have been damaged by negligence, floods, or accidents and only superficially repaired. Verifying car history can be a time-consuming chore.

• Difficult to find:
There is much effort involved in searching for a pre-owned car that suits your taste and budget. You may have to scan many advertisements and visit several dealerships before finding the car for you. It is not as simple as walking into a showroom and filling the order form for a new car.

• Maintenance
: This is an often-overlooked factor. The cost of maintaining a pre-owned car of a given price will be more than the cost of maintaining new car of the same price. For example, a 5 lac rupee pre-owned Honda Accord or Mercedes Benz W124 will cost more in upkeep than a new 5 lac rupee car.

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