New sedan or used SUV?

The first car one purchases is typically a hatchback priced within Rs 5 lakh. A few years down the line, the car becomes smaller, in terms of need as well as perception. The desire to upgrade grows steadily and the budget is set at twice the original amount, with Rs 10 lakh being the upper limit. That is where the dilemma begins. Should you go in for a new sedan (basically a hatchback with more leg room and a boot) or a ‘used’ SUV? Since each option has its share of pluses and minuses, let’s examine some of the key aspects that should be considered before taking a decision.

1. Space or image
Are you looking at a SUV despite your limited budget because of the additional space it provides or just because you want to flaunt it?  At an online discussion forum titled ‘second hand SUV or brand new sedan’ on Tsikot.com, one of the views shared was that one should opt for an SUV only if he needs the space. Otherwise all his money will be invested on the ‘image’ that an SUV gives. If that is the case, it is not worth it and definitely not practical to opt for a used SUV over a new sedan, members opined.
 
2. Basic advantages
Outlining the advantages of choosing either route on caranddriver.com, David Gluckman underlines the biggest advantage of a new car – it can be made to order. You can specify a new car the way you want it, or at least have the dealer search for one with the right combination of options and interior and exterior colours. Plus a new car hasn’t been in any accidents, hasn’t been mistreated by unknown evildoers, doesn’t smell funny, has seen no wear or tear, and comes with a clean history that only includes being driven off the line, onto a transporter, and around the dealer’s lot.

3. What do you get?
You can buy warranties for used cars or go the certified pre-owned route, but the best warranty you can get—without paying extra—will be the one that comes with a new car from the manufacturer. Also, the newer the car, the more modern will be the geeky tech that’s packed inside. Multimedia and navigation interfaces are constantly evolving and improving, so if you have to have the latest in gadgets the selection will be better in the new-car showroom. Also, cars are largely getting more fuel efficient, even while simultaneously getting more powerful. Banks also offer lower financing rates on new vehicles because the vehicles are inherently worth more and have not already been hit by depreciation.

 4. Maintenance costs
Some new cars include free scheduled maintenance for a certain amount of time or mileage. This built-in cost saving should be considered in the final price analysis if applicable. With a used SUV, there’s no telling when the meter will start running at the garage.

5. Price proposition
The relative advantage of the used-car price can also allow a buyer to step up to a nicer model. Depreciation is another factor. New cars lose value with each passing month and mile, but the steepest decline happens right away. With a used car, there’s no depreciation hit the second you roll off the lot. There’s also less mental depreciation, no need to worry about the first fender bender or scrape by a truck on the highway.

6. Evaluate both
In the five tips to buy a used car in India featured on the wheelsunplugged website, its advised to evaluate a new car before you buy a used car. Buying a used car will often cost you more over a 2-3 year period than buying a new car. This is because of the depreciation of the value of the car with age and number of owners it has had. Though the initial investment on a new car is a lot higher than a used one, over a period of two to three years the new car will retain a better resale value than the used car.

7. If you must buy used
Popular models will always be a little more expensive to buy, but their value will depreciate a lot less over the years. Moreover, they will always be easy to sell as opposed to those, which really didn’t do well while they were in production. Look at current trends and their impact going forward. Buying a second hand compact SUV may turn out to be more expensive now, but in the future these cars will hold their value better than hatchbacks or larger SUVs.