Should You Get a New Car or Used Car?

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For first-time car buyers, one of their biggest decisions to make is choosing between a new and used car.

While both have their merits and weak points, there isn’t a one-size-fits-all solution to this age-old problem. Thus, the best thing to do is take all the factors of buying a car (new and used) into consideration, weigh up the differences and find out which is best for you.

1) Lead Time

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Lead time, otherwise known simply as waiting time, is the duration between you signing the papers and getting the keys to the car you brought.

When buying a new car, unless the dealer has ready-stock already in the country, you might be looking at a lead time of a few weeks to months for the car to be imported in. But, the lead time for buying a new local car from manufacturers like Proton and Perodua might be shorter as the cars wouldn’t need to be imported in.

When getting a used car, chances are you can drive it right off the lot after signing the papers, barring any unexpected issues with the car.

2) Car Loan

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Unless you have the financial capability to pay for a car in full, you will need to take a bank loan. Traditionally, new cars have been offered with lower interest rates (2.3% to 3%) compared to a used car (3% to 4%).

But despite the higher interest rate, buying a used car is still considered more ‘value-for-money’ if you factor in depreciation (which we will talk about more later).

If you choose to buy a new car, the car manufacturers themselves might be able to give you a good deal on your loan interest. Most car manufacturers in Malaysia will have partnerships with banks or hire purchase companies to offer their customers the best rate in an effort to boost the sale of new cars.

Despite this, you should still compare the rates of other banks yourself, who knows, they might end up giving you a better deal.

3) Down Payment

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In Malaysia, regulations state that car dealers are only allowed to offer a maximum of 90% loan, which means a minimum of 10% down payment is required upfront. But despite this, there has been reports of car dealers advertising ‘zero-deposit’ cars in an effort to attract customers to the showroom with the lure of 0% down payment.

As expected, a 100%, or even 90% loan, would result in a high loan payback every month and/or a prolonged loan period. With new car buyers, there is often a warranty on the new car to help lessen the financial blow with the promise of free maintenance in the first few years of the car’s life.

The same can’t be said for used cars with warranties that have run-out before hitting the market. Thus, the financial commitments for used cars can be quite high from the start, especially if the car needs some minor repairs.

4) Depreciation

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All cars, regardless of whether they are bought new or used, will depreciate over time. However, the speed and amount in which it will depreciate depends from car to car. There is not exact formula to calculate your car’s depreciation, but the condition of the car and its popularity on the second-hand car market are big factors to your car’s depreciation.

For new cars buyers, a general rule of thumb is, the earlier you sell your car, the more money you stand to lose. New cars can depreciate by as much as 30% in the first year, with the percentage decreasing with each passing year.

Because of that, used cars depreciate less than new cars, with new continental car owners taking the heaviest depreciation. Due to continental cars being some of the more expensive cars in the market, buying a used one means you would not have to deal with, a 30% drop in value in the car’s first year, for example.

As some continental cars are a reputation for being reliable, chances are they are a good buy used, and you won’t have to worry too much about maintenance.

Deciding between a new and used car is a big decision. At the end of the day, no one can make that important decision for you. With good budget management coupled with proper calculations of one’s finances, we are sure you will make the right one!

Thinking about selling your car and getting another one after reading this article, why not turn to us for help?

Here at Motorist, we offer a free car valuation service for everyone. Our valuation system is completely free and accurate, and we will consolidate all the bids from hundreds of car dealers and get the highest offer for you. If you are willing to let go of your car at that price, we will arrange a meetup between you and the car dealer.

As we said earlier, this service is 100% free, so there is really no reason why you should not get your car professionally valuated!

Read more: Selling Your Used Car Online with Motorist Malaysia