6 Reasons to Buy a Secondhand Car [Plus Pros of a Used Car Loan]

Buying a secondhand car offers significant savings and slower depreciation. Read on to know more about why you should opt for a secondhand car.

A vehicle is a great asset that can serve you for over a decade. While owning one has its fancy perks, unlike immovable property, a car’s market value doesn’t increase over time.

Hence, when you convert it to cash, you will get less than what you initially paid. Moreover, new models are becoming more expensive every year, making cars a high-value purchase for the average person.

Ironically, despite the constant rise in prices, the average lifespan of a car is decreasing. With all these factors, opting for a secondhand vehicle may be more practical today.

Car manufacturers launch updated versions of their automobiles almost yearly, and many barely-used recent models are sold for a lot less. This is good news for those in the market for a secondhand car.

Accordingly, a used automobile can be a smart choice for first-time buyers or those looking to purchase a second family car.

If you’re planning to buy a vehicle but are still torn between a new and a secondhand model, here are a few compelling reasons why you should choose the latter.

[1] Significantly Cheaper. The primary and most obvious benefit of buying a 2nd hand car instead of a new one is that you will pay substantially less for the same make and model.

Pre-owned vehicles are more affordable than their brand-new counterparts — usually between 10% to 70% less than their original price — and provide greater value for your money.

Consequently, pre-owned cars have lower insurance costs since their value has decreased over time. However, insurance costs will still depend on the deal you get.

You can compare several models from different used car dealerships and choose the one that best meets your needs and preferences.

While at it, compare the quotations and go with the dealer offering the lowest price. Plus, if you buy from a third-party seller or directly from the previous owner, you might obtain a better deal because there is no commission to pay intermediaries.

[2] Slower Depreciation Rate. A significant downside of buying a new car is that its value depreciates the instant you drive it out of the dealership. During the first few years of ownership, the car’s market value plummets by 30% at an alarming rate.

Hence, you won’t have to bear the burden of your car’s depreciation when you purchase a used vehicle. While a secondhand car will still depreciate, you will lose money more slowly since you got it for a lot less.

[3] Minimal Miscellaneous Fees. When you purchase a new car, you must make additional government payments, including one-time registration fees, vehicle tax, and other RTO costs. These payments increase the vehicle’s on-road pricing.

Buying a used automobile can help you dodge these extra expenses because the first owner would have already paid for them. You’ll get the most bang for your buck and won’t have to shell out more than the asking price.

However, check if all paperwork is in order and get certified copies before closing the sale transaction. The dealer or the previous owner should give you the vehicle registration certificate, purchase invoice, all existing insurance policy documents, and any file about the vehicle’s service history.

[4] Complete Warranty. A secondhand car is often seen as mere junk. However, the situation has dramatically improved with the rise of the used car market over the past few years.

You will be given full assurance about the durability of the vehicle. Some dealers also offer a limited warranty on the cars sold and a free vehicle inspection. Before being delivered to consumers, the cars are rigorously checked for quality and durability.

[5] Test Owning. You’ve likely heard of test-driving a car, but have you ever considered test-owning one? For a good reason, the latter is gaining favor.

A fast test drive with the salesperson yammering in your ear provides little information. In contrast, test owning entails purchasing a car with the assurance that you can return it for a full refund within a few days if you change your mind.

[6] Smaller Loan Amount. Because a secondhand car is less expensive, the amount you may have to borrow from a lender will also be smaller. Many financial institutions provide used automobile loans with larger borrowing amounts and lower interest rates.

Competitive interest rates imply that less money must be repaid in Equated Monthly Installments (EMIs). You can get a used vehicle loan and acquire a pre-owned car without financial trouble.

Speaking of used loans, here are some advantages that may help you finalize your purchase decision.

• The buyer is not required to pay the total payment upfront. It is uncommon for a buyer to purchase an automobile and settle off the total amount at the point of purchase. Obtaining a used car loan allows buyers to get the vehicle they want and pay off the balance over time.
• It can improve credit scores. A used automobile auto loan can be a good way to improve credit for people who utilize them properly and complete their payments on time. A consistent payment history raises a person’s credit score, which is necessary for obtaining affordable mortgage and automobile interest rates in the future should you choose to apply.
• It provides a better alternative to leasing. Leasing is another cheaper option explored by many consumers who want to drive a car without buying an expensive brand-new model. As opposed to leasing, taking out a loan enables the consumer to make payments toward vehicle ownership. On the other hand, leasing is like renting a vehicle from the manufacturer. Yes, you can drive it like it’s yours, but it may not seem worthwhile if you compare the leasing fee to the extent of use you got from the car.

Pre-owned Cars: A Practical Choice

Both new and used cars offer consumers distinct advantages. However, if your goal is to save money and mitigate financial losses caused by fast depreciation rates, a pre-owned vehicle is a wiser and more sensible option.

Lou Zandrian Lobrin is the Marketing & Communications Manager of AsiaLink Finance Corporation, one of the Philippines’ fastest-growing finance companies with 94 branches nationwide. He enjoys traveling, cultural immersion, and meeting new people outside work.