It is currently difficult, if not impossible, to get a new vehicle. Despite rising prices, the second-hand market is, therefore, the only choice. However, current shortages are not the only reason why one should consider second-hand vehicles.
The used car market has never been as contracted. In this article, find out why buying a used car is still worthwhile despite the recent price increase.
Shortages
The automotive market is suffering from numerous shortages caused by the pandemic at first and now by the war in Ukraine. As a result, delivery times have been extended considerably, or even indefinitely. Some cars are simply not available. In addition to being frustrating, this can hurt the resale value of one's vehicle. Due to the rapid pace of technological development, a new car delivered later than planned may already be more or less obsolete when arriving. Until the situation eases (which could take years), the second-hand market remains the only option.
Finance
Inflation
New cars are also subject to inflation. Prices on the second-hand market are booming. This effect is more pronounced in some regions. However, new cars have also seen their prices rise in both the long and short term. Thus, the entire car market is affected by inflation.
Depreciation
With a few exceptions, cars are depreciating assets. We have an article on this topic. The annual loss of value of a vehicle is decreasing. We generally speak of a 15% to 30% drop during the first year. After a certain point, the residual value stabilises.
Used cars are less subject to this effect. By buying a car that is not new, one can avoid the high depreciation of the first years of ownership. This results in a competitive purchase price and reduces the exposure to depreciation. In some cases, depreciation has reached its maximum and the residual value of the vehicle remains stable regardless of use.
Maintenance
Maintenance costs for a used car may be higher. However, they must not be. A high mileage vehicle is more prone to breakdowns due to component wear. Nevertheless, new vehicles also suffer from reliability issues. Moreover, the reliability of a used car is highly dependent on how well it has been looked after. A car that is regularly and properly maintained should not have any particular problems. It is also possible that some preventive repairs have already been carried out, making it more robust than when it left the factory.
Warranties help to reduce maintenance costs. As manufacturers' warranties become longer, it is common for a used car to be still covered. Extensions of warranties are also available. Vehicles with such cover are particularly attractive as they have usually been fully inspected by the manufacturer before approval of the extension. If this is not the case, it is possible to conclude a warranty with a third party company (Quality1, Mobile, etc.).
Insurance
A used car costs less to insure. As the residual value of the vehicle is less, the insurance company's risk is lower. This diminishes premiums. In addition, some coverages are less important for used cars. However, this depends on the case and the vehicle. In the case of leasing, these savings may disappear. In the case of special or collectors cars, the opposite effect may also happen.
Ecology
The most environmentally friendly car is the one that already exists. Although older cars do not necessarily meet today's emission standards and are therefore theoretically more polluting, the resources needed to produce them have already been used. Indeed, the production of a vehicle requires a lot of energy. Despite green energy and greenhouse gas compensation, this process is still polluting. Although it may seem counter-intuitive, by buying a used car and taking care of it, one contributes to the reduction of natural resource use.
Equipment
Options on new cars are often expensive. However, on the second-hand market, they do not necessarily make it more valuable than a less optioned comparable one. In fact, options facilitate the sale more than they increase the selling price. There are of course exceptions. For buyers, it is an opportunity to get a well-equipped vehicle for a fraction of the amount they would pay for a similar new vehicle.
Driving experience
Vintage cars offer an inimitable driving experience. The automobile is currently on the government's radar and is viewed with a critical eye. As a result, numerous measures have been taken to increase safety, reduce noise and cut emissions. Although this is understandable and reasonable, these actions are detrimental to the driving experience of modern cars, which, for enthusiasts, is painful. As a result, youngtimers or oldtimers have a certain charm that newer cars do not have.
Conclusion
Buying a second-hand car has economic, emotional and environmental advantages. However, it also has its drawbacks and pitfalls. In this regard, we recommend our buying guides. Also, the experience of buying a new car can, for some, be worth more than the depreciation involved.
The simplest solution remains to delegate the purchase of your car to an independent professional who will be able to advise you on the market and the vehicles that correspond to your requirements. At Carequest, we do exactly that!
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