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FEATURE: Why Buying A Used-Car Makes Perfect Sense

When it comes to car purchasing, especially on this side of the world, it isn’t as easy as it seems. Car prices here in Malaysia aren’t exactly cheap to begin with, coupled with high roadtax for bigger capacity engines, suddenly that dream of owning an American Muscle Car just doesn’t seem so realistic anymore. Sure, one may argue that in this day and age, a smaller engine makes more sense than a bigger sized engine. But we’ll leave that for another day. As for this article, let’s have a closer look as to why buying a used car may make more financial sense over a new car.

1. Choices

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As a buyer, you’re practically spoilt for choices when it comes to used cars. Sure, almost every new car manufacturer has a model to suit their target crowd, but personally, I would not be caught driving a Toyota Vios or a Perodua Myvi for that matter. Given the choice, I would personally prefer a more ‘mechanical’ car, as opposed to having too much electrical and electronic gadgets modern cars pack. Besides, some older cars are also legendary, like my editor’s Ford Laser TX3. You can’t possibly find a modern equivalent of such a car anymore.

2. Depreciation

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Apart from landed properties, cars are seen as a liability to other people, but to us, they are our asset, our pride and joy. Let’s take for example, a new Proton Preve 1.6 CFE. When new in 2012, the car cost RM72,990. 2 years down, prices for a used model would cost anything from RM45,000 to RM50,000. In the first year itself, the buyer of the new car loses some RM8000+ to depreciation. Used cars too, suffer from depreciation, but they do not depreciate as badly as a new car. Unless you have a bank account of at least 6 digits, I probably won’t comment on how bank loans operate as well.

3. Price

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Alright, inevitably, this may tangle with choices that I mentioned earlier. But the truth is, both are inter-related. Say for example, you’re in the market for a sub RM50,000 car, and you have the choice of both a new and a used car. On the new car front, you don’t have much choices, ranging from the Perodua Axia, Perodua Myvi, Proton Saga, Proton Iriz, Proton Persona, Great Wall Haval M4 and  the Hyundai i10. Yawning yet? Now wake-up because for the same price, let’s have a closer look to what used cars we can get. For starters, there’s the 2006 Honda CR-V, 2006 Toyota Camry 2.0, 2006 Mitsubishi Outlander 2.4, 2006 Honda Jazz, 2007 Toyota Altis 1.6, 2010 Kia Forte 1.6 and even the 2008 Nissan Sylphy 2.0. For that, we’ve limited our choices to cars no older than 14 years of age. If we were to broaden that search, expect more cars to appear. All for the same price as you can get a Proton Saga, or even less.

4. Warranty

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Yes, new cars have factory warranties as standard, but with the introduction of some even longer factory warranty options, buying a relatively new used car does make sense. For example, you can pick up a used 2012 Kia Forte 1.6 from as cheap as RM56,000, and still enjoy another 3 years of factory warranty. Other marques like Volkswagen also offer a 5-year warranty, but only the first 2 years are covered by the manufacturer, while the remaining 3 years are under the panel insurance. If you wanna play it safe, there’s always the pre-owned program offered by several marques locally, like the BMW Premium SelectionBut do check the warranty transfer and coverage. As usual, read the Terms & Conditions. 

5. Financial Burden

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Statistics have shown that most car buyers are in their early twenties and has just started working. And most of them barely earn more than RM3,000 a month. With that being said, these bunch of people, just can’t wait to get their hands on a new car. We wouldn’t blame them for that, since our public transport system leaves much to be desired. But, due to their poor financial planning, they will end up buying cars way above their means. It does not make financial sense for a young working adult to buy (and subsequently loan) for a RM80,000 car. We suspect this is due to peer pressure and/or wanting to look good. For all means and purposes, a used Toyota Corolla that costs less than RM20,000 does the job perfectly fine, with minimal damage to their finances. For this crowd, a car should function purely as a means of transport, and not a way to show-off.

6. Lower Cost of Insurance
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One major point when maintaining a car is the insurance policy. Insurance for motor vehicles don’t come cheap, especially those without any No Claim Discount (NCD, alternatively called No Claim Bonus, NCB). For new car buyers buying a RM70,000 car, the insurance premium can cost as much as RM2,000. Assuming that the buyer does have his full 55% NCD, insurance for the RM70,000 car will still cost close to RM1,000. Even a regular RM45,000 car will have an insurance premium of RM1,400 or so. Comparatively speaking, an old Toyota Corolla with a sum insured of RM13,000 (liability only) will only need to pay an insurance premium of RM400 or so. Dont forget, starting in 2016, Malaysia will be adding risk factor to insurance premiums as well, which means that prices will go up again.

If you have decided to buy a used car, please do not forget to do the usual inspections, and if possible, get the help of your trusty mechanic. Check the car thoroughly, and insist on a test drive. If the car dealer refuses a test drive, walk away. Car dealers tend to refuse test drives since they may know the car is problematic. Also, be prepared to fork out some money to get the car back in decent running condition, which means replacing worn parts like drive shafts, brake pads, engine mountings, clutch plates etc.

Chris Wee’s sub-RM10k Used-Car pick: The Forgotten Gem…

Eric has already mentioned the Ford TX3 that I bought last year because I accidentally engaged in a discussion with some like-minded petrolheads on the virtues of this once great car, and ended up so smitten all over again that I just had to get one; my third actually. So let me tell you about a car that’s a no-brainer, especially for those just starting out in the working world, and who need a reliable means of personal daily transport.

Let’s create a scenario first: You’ve just started working, your salary ain’t that great, you have overheads and bills to pay, so the LAST thing you need are car maintenance problems. You want, nay, you NEED something reliable, dependable, hassle-free, good on gas and cheap to run and maintain, that you can buy for about RM6k (more or less) cash, which will then become your daily commuter. Look no further than this: The Nissan Sentra.

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Granted it’s not going to win any beauty contests, but what lies underneath its sheet-metal is probably one of the most versatile and dependable power-trains that’s ever been created by man. It’s the younger sibling to the Nissan Sunny, THE hardiest car ever made, that simply refuses to die. The Sentra is powered by a proven 1600cc twin-cam, 4-cyl engine, and available in both Auto and Manual transmission, the Sentra is what I like to refer to as a PPG car (put petrol & go). If maintained well and serviced regularly, the engine is absolutely bullet-proof.

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There are two types, the older one (above in red) is still being used by Genting Highlands taxi drivers (the best testament to their hardiness actually, and if you’ve ever seen them flying up that mountain you’ll know what I mean) and the later less-squarish model (the white one above). Both are in the sub-RM10k bracket now, both are equally easy to drive and maintain, and as hardy as they come. Parting advice: Stay away from ALL continental used cars till you make more money. – Chris Wee.