Buying a car is a big decision—whether you are buying a used car or new car. To some people, it’s more than just getting from one place to another, but also a matter of pride and status. Well, contrary to common childhood dreams, a sparkly new car may not always be the ideal option—you’d be surprised by the number of advantages in buying a used car instead!
Minimizing depreciation costs
One of the biggest advantages of buying a used car is that you don’t have to bear its depreciation costs. Within a few years, it’s highly likely that you’ll be able to sell your car for nearly the same amount that you paid for.
A brand new car depreciates within its first few years of use—which is why the price difference between a new car and the same model with 5 years of use, can be huge:
|Year 2018||Price||Year 2013||Price|
|Honda City 1.5V||RM86,983||Honda City 1.5E+||RM48,800|
|Myvi 1.5 AV||RM54,090||Myvi 1.5SE||RM31,000|
|Toyota Vios 1.5J||RM77,200||Toyota Vios 1.5J||RM42,800|
It won’t affect your DSR rate as much
A used car’s price will most definitely be better for your financial track record as its lower monthly payment won’t affect your Debt-Service-Ration too much. This is how banks calculate whether you’re able to afford the loan you’ll be applying for:
Formula used to calculate DSR:
Every bank analyzes DSR slightly differently, but it’s good to keep it within 60%. Therefore, if you’re committing to a big investment, buying a used car might be the more sensible choice for you.
From an environmental point of view, it surely is better to buy a used car or keep your existing car well-maintained for as long as possible. But that aside, environmental impacts happen when manufacturing a new car and also when you toss your old car into a junkyard. When a new car is being manufactured, all the different materials used (like steel or rubber) leave carbon footprints behind—and that’s before the car is even bought and driven on the road.
You might be wondering “What about used hybrid cars?” Yes, it lowers the impact of emissions by 15%–30% when you’re on the road, but you’d be surprised by the output of carbon dioxide during its manufacturing stage. While electric cars seem to be more of an environmentally friendly option, it may cause a negative impact if the outlet in which the vehicle is charged is not connected to a renewable energy source—the vehicle is only free of emissions if the outlet is connected to a renewable energy source and not a coal based power plant.
Unfortunately, decision-making during adulthood isn’t as simple as black and white, especially when it’s spending a chunk of your savings! We hope this gave you some insight—and that no matter what car it is, we’re here to help. Find your dream used car here.