New Car or Old Car...What to Buy?
This argument will never end and replicates with that of Politics discussion. No one is right and no one is wrong. But yes, each person has their own viewpoints and most importantly the requirements. For an average Indian, a car is not something that is replaced every 3 or 4 years. It’s an important decision that any Indian family takes. This purchase has emotions and we believe in keeping the old ones close to our hearts, so a huge amount of time is invested to select the right one and right type.
Choosing out of many available options was itself a burning task and opting a new one or second hand is another. Market is full of options and even the Covid-19 hasn’t slowed down the automotive market. So enough background information and let’s move on to the pros and cons of new & old cars.
New Car Pros:
1. Less Maintenance Cost with less chances of being stranded on a trip.
2. Advanced Features and technology with latest updates.
3. Lower Financial cost in terms of Car loan with low interest rates
4. Most Important: The smell of a new car you can never resist.
New Car Cons:
1. Higher Depreciation Cost
2. Higher Registration, Insurance, and definitely the price
3. Most Important: The heart pinches with even a single scratch
Old Car Pros:
1. Lower Price, No registration or high insurance
2. Low Depreciation Cost
3. Most Important: You’re chill even if you break the front bumper
Old Car Cons:
1. No updated technology or features
2. Highly expensive in terms of servicing, wear and tear, getting the parts
3. Unreliable in most of the cases (90%)
4. Most Important: Dry-cleaning smell will fade in just a few days.
Now, all of the above points were just points. Let’s understand it better with an example of the Maruti Suzuki Swift. Car in this segment costs between 5 Lacs to 9 Lacs depending upon the model. Average Indian spends around 20% on Down payment (For New & Old car) from his savings that comes at around 1 Lac to 1.5 Lacs. Next we will understand this cost with expenses like Buying, Running & Maintaining a car.
New Car with tenure of 5 years
Expense of BUYING it sums up as below:
a. Down payment: 1,00,000
b. Loan Amount: 5,00,000
c. EMI for 5 years at 9.25% : 10,000
d. Total amount payable to bank: 6,00,000
e. Registration Fee, Insurance & Taxes:
50,000
Total Cost: 7.5 Lacs
RUNNING it for 5 years
a. Per KM cost of new car: 6 Rs/KM
b. Average KMs covered per week: 250 KM
Total Running cost in 5 years: 3.9 Lac
MAINTAINING it for 5 years
Maintenance would be free for 1st year
and would increase by 10% every year. Let’s suppose from 2nd year, it costs Rs 6000 to maintain it.
a. Maintenance Cost: 40,000
b. Insurance: 1,00,000
Total Maintenance: 1.4 Lac
So, Total Ownership Cost of a new car would be 7.5 Lac+3.9 Lac+1.4 Lac which comes at around Rs 12.8 Lac.
Old Car with tenure of 5 years
Expense of BUYING it sums up as below:
a. Down payment: 1,00,000
b. Loan Amount: 3,00,000
c. EMI for 5 years at 14.5% : 7,000
d. Total Amount payable to Bank: 4,20,000
e. Registration Fee, Insurance & Taxes: 0
Total Cost: 4.2 Lacs
RUNNING it for 5 years
a. Per KM cost of new car: 8 Rs/KM
b. Average KMs covered per week: 250 KM
Total Running cost in 5 years: 5.2 Lac
MAINTAININGNG it for 5 years
Maintenance cost would start from the very first year and let’s suppose it would be Rs 12,000 for the 1st year and would increase 10% every year.
a. Maintenance Cost: 60,000
c. Insurance: 70,000
Total Maintenance: 1.3 Lac
So, Total Ownership Cost of old car would be 4.2 Lac+5.2 Lac+1.3 Lac which comes at around Rs 10.7 Lac.
So, as you have understood, my math is not exact but in approx. terms you guys have understood the difference between a NEW & OLD car. Though it’s cheaper to own an old car, the smile, joy, satisfaction a new car can bring in your life is unmatchable. Both the options are right and not wrong….It’s just you have to decide what your lifestyle and needs are.