How to Decide Between Buying New or Used Cars

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Old can be gold when it comes to certain things. When it comes to cars however, that may not always be the case.

Old can be gold when it comes to certain things. Take wine for example; its taste cultivated and refined as it ages over the years. When it comes to cars however, that may not always be the case. When deciding between a new car and a second-hand ride, most people would place emphasis on the costs of buying the car, but it should not be the only determining factor when you consider your options. In this article, we will talk about the various factors that you should take into account in your decision-making process.

Generally speaking, second-hand goods are usually cheaper than new ones. They lose value either due to usage or time. Similarly, cars can lose significant value due to depreciation. For instance, purchasing a new Toyota Altis 1.6L would set you back by about $95,000. Buying a secondhand model left with a 5-year COE though, may cost around $60,000 instead. You may even get lucky and have the road tax for that particular year fully paid for by the previous owner, earning some additional savings that are sure to be welcomed by many.

Used cars are not always cheaper

This might sound contradictory but second-hand cars can actually be more expensive. Let me explain why. While wear and tear is inevitable over the course of several years, the real problem often stems from inadequate upkeep by previous owners. There is no telling how much effort the previous owners put into maintaining their car. If they had neglected this aspect, you can expect to fork out a bigger bill for repair and maintenance that you are now accountable for. In the long run, the total cost of owning a second-hand car may outstrip the cost savings when you first purchased it. There is also a risk that – if your car is an older model – replacement parts would be harder to source for and therefore further drive up related costs.

The higher the PARF and COE, the more valuable the car

Depending on the Additional Registration Fee that was initially paid for, a second-hand car can command a high Preferential Additional Registration Fee (PARF) value that is carried over to your purchase price. For example, paying $20,000 for a used car with a PARF rebate of $5,000 means that you are essentially forking $15,000 out of your own pocket. Thereafter, deregistering your car before your COE expires allows you to recoup some of the costs for the remaining amount of time left. So if the quota premium that you paid for your COE was high, you will be pleased to know that you can receive a significant COE rebate upon deregistration.

Bear in mind though, that not all second-hand cars are entitled to a PARF rebate. It is absolutely crucial that you conduct a check on the previous owner to verify if the COE had been renewed after 10 years. Cars that have had its COE renewed are known as “COE cars” and do not warrant a PARF rebate but are still eligible for a COE rebate.

Manufacturer’s warranty only covers first-hand cars

Warranty should always be one of your priorities when dealing with new or used cars. The former usually comes with a manufacturer’s warranty that ensures your car is protected even when sold by a third-party dealer. For a really comprehensive coverage, opt for a bumper-to-bumper warranty that covers manufacturing flaws and defects of almost every component of the car apart from the usual wear and tear.

Purchasing a used car may not grant you that privilege however. Car warranties are usually tied to a certain duration or mileage and chances are that there will not be much left on a car that has been utilised for some time.

Lemon Law protection

Singapore has a law which states that consumers are entitled to repairs, replacements or complete refunds within 6 months of delivery when they purchase a faulty product. This law extends to cars as well, although there is an exception to the rule. The Lemon Law is only valid in dealings between businesses and consumers. Transactions with an individual seller on an e-commerce platform such as Carousell are not protected under this law.

A lot of second-hand car dealers sell used cars on consignments. That is, they sell cars on behalf of other individuals. Hence, these are considered consumer-to-consumer transactions rather than business-to-consumer ones, making the Lemon Law inapplicable.

Unfavourable terms for second-hand car loans

Interest rates for second-hand car loans tend to be higher because of the bigger risks associated with older vehicles. There is always a risk that borrowers may default on their loan repayments and when that happens, lenders might resort to repossessing the car and selling it to recoup the balance owed to them. In fact, a lender’s worse nightmare is being unable to reclaim the total outstanding amount and used cars that tend to command lower prices do not offer much leverage. Thus, the terms of car loans for second-hand vehicles are often less than desirable.

Condition of the car

It is imperative that you check the condition of a used car: clarify the number of years it has been in service, the mileage it has covered in that time and look out for visible defects on the exterior. Insist on taking it for a test drive as this will reveal any underlying issues that may be hidden from view. This could include transmission anomalies such as lurching, clutch, gear slippage and vibrations. Pay attention to the brakes to see if they are functioning as they should or if they appear worn out. If the brake response is slow and there are screeching sounds when braking, it is something worth investigating or reconsidering.

If you would like an expert opinion on the state of a used car, seek out a car evaluation from the Automobile Association of Singapore or other trusted mechanics and centres. They will help you to evaluate whether the car’s condition is worth paying for. Wear and tear is inevitable in used cars, and there is no guarantee that it has never been in an accident before or properly maintained. Therefore, it is always beneficial to have the car professionally checked.

Odometer tampering

Unfortunately, there have been cases where used car dealers tamper with the odometer to reflect a lower mileage than the actual value. This dishonest practice has been verified by experts within the industry as a common tactic employed in a bid to increase the saleability of used cars. Here are some measures to take so that you do not end up a victim.

  1. Approach an established second-hand car dealer. This will decrease the probability of you being scammed.
  2. Be sceptical about exceptionally low prices. If it sounds too good to be true, it probably is.
  3. Obtain evidence. Insist on seeing the full-service records of the car to see the clocked mileage.

Conclusion

Of course, saving money is always a motivating factor behind opting for a second-hand car rather than a new car. There are pros and cons to each, as well as some inherent risks to take note of. If you deem the risks to be too high, you should consider forking out a bit more for a brand new ride and a peace of mind.

Advantages of new cars

Advantages of used cars

Everything is fresh, from the wheels to the engine and even the paintwork

Generally cheaper than buying a new car and subjected to lower depreciation

First-hand option on customisation such as bodykit, spoilers and accessories

Additional accessories can come with the car at a discounted price; you may even get a well-maintained car that looks as good as new

Complimentary car servicing

Lower car insurance

Lower interest rates on bank loans

Shorter waiting time 

Verdict

What we like
- Luxurious feel
- Large telematics touchscreen
- Extremely spacious
What we do not like
- Lack of automatic boot for auto close
- Drive shaft even though it is a front wheel drive
Editor’s recommendation
The Toyota Camry has successfully done a full model change that is significantly sportier and aesthetically better looking compared to its predecessor. It does not feel you are getting a second class car as compared to equivalent continental class cars, yet the cost savings are substantial.

Specifications

Toyota-camry-gear-knob.jpg
A car that negates risk

Verdict

What we like
- Luxurious feel
- Large telematics touchscreen
- Extremely spacious
What we do not like
- Lack of automatic boot for auto close
- Drive shaft even though it is a front wheel drive
Editor’s recommendation
The Toyota Camry has successfully done a full model change that is significantly sportier and aesthetically better looking compared to its predecessor. It does not feel you are getting a second class car as compared to equivalent continental class cars, yet the cost savings are substantial.

Specifications

Toyota-camry-gear-knob.jpg
A car that negates risk

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