When moving to a new city, having a car for ease of transportation is essential. While many people find new cars more appealing, some experts say that buying a second hand car is a much smarter choice, especially if you have a limited budget. Both options have their merits and shortcomings. The following guide has been put together by ServiceMarket in collaboration with the experts at CarSwitch.com to make choosing between a first hand and second hand car an easy decision for you.
Here are some of the key factors you should consider while deciding whether a new car or second hand car is more suitable for you.
Rate of Depreciation
If you buy a new car, the value of your car will fall by thousands of dirhams in the first few years. Many people do not realize that a new car can depreciate by more than 20 to 30% as soon as they buy it. The rate of depreciation decreases as your car grows older, so you can avoid most of it by buying a slightly used car. However, if you are planning on keeping the car for a long time then this may not be a large concern for you.
Budget
People with a limited budget should explore the used car market and see if they can fit a better make or model into their budget. For example, you may be able to find a car that is just a couple of years old with more features for a lower price. This way, you can enjoy premium features without stretching your budget.
Vehicle History
Many buyers avoid second hand cars because they are worried that the car may have issues and previous repairs from accidents it has been involved in. However, in Dubai, you can check a car’s accident history by entering the car’s chassis number on the Emirates Vehicle Gate website. In addition, you should also ask the seller to share the car’s dealership and service history with you. Used car platforms like CarSwitch also share inspection reports with buyers.
Insurance Premiums: New vs. Used
Some say that insurance costs more if you are buying a new car, while others maintain that the rate is higher for used cars. This is because the insurance premium is calculated by considering both the age of the car and the car’s current value. Insurers will usually offer you a better rate (percentage of car value used to calculate the insurance premium) on new cars. This is because people generally drive more carefully when they have a new car.
Moreover, spare parts for older cars usually cost the same or more than spare parts for new cars, meaning that spare parts for used cars tend to be more expensive relative to the car value. On the other hand, used cars are worth less than new cars, so you might end up with a cheaper policy even though the rate is higher.
Car Loans: Financing Your Purchase
If you are considering financing your car, know that banks generally offer lower interest rates for new cars. Older cars, especially those more than eight years old, may come with higher financing rates or even be ineligible for loans. To avoid unaffordable monthly payments, consider your car’s age and the loan terms carefully before committing. When living in Dubai, keep a lookout for offers on car financing. At times, banks offer low interest rates and easy financing terms.
Warranty Considerations
New cars come with a more comprehensive untouched warranty. However, some used cars are still under warranty, and if you buy through CarSwitch, the car will come with a three-month warranty that covers the engine, AC, and transmission. Be sure to review the specific warranty terms and conditions provided by the seller or platform to fully understand the coverage.
Maintenance Cost
This is another important factor you should consider while buying a car. New cars typically need very little maintenance. On the other hand, maintenance costs tend to increase with the age of your car. It is often hard to figure out whether a new car’s depreciation or a used car’s maintenance will cost you more in the long run. To avoid high maintenance bills, it is recommended that you do not buy a very old car.
Gadgets and Features in Used Cars
One advantage of buying a used car is the potential for extra features. Many car owners upgrade their cars with the latest gadgets and infotainment systems. While selling their car, many of them would be willing to throw these gadgets and features into the deal for no extra cost.
The Verdict
Buy a used car that has only been driven a few thousand miles. If you know that the car has been kept in a good condition and comes with a warranty, go for it. You can compare used cars and their prices on CarSwitch.com. All used cars listed there undergo the CarSwitch 200pt check and come with a three-month warranty.
If you are moving to Dubai or have just moved to the city and are thinking of getting a car, consider the factors mentioned above, and make an informed decision that aligns with your needs and financial situation.
