Thursday, March 26, 2009
Used Car versus New Car
Great to come across your blogs, you did a very good job on providing us the very useful infos and tools :) I'm looking for a cheaper car as my daily transport for working, i don't care whether it's used car or new car as long as it's cheaper.
I'm a new learner on buying car. Would you mind to give me opinion among 2 cars below, which one is value to buy?
Date Posted 18-Mar-2009
Ad ID CAR-28873
Expiry Date 10-Jul-2009
Make & Model Kia Picanto GL 1.1
Price S$ 13,500
Engine Capacity 1,086 CC
Additional Information Description:
* Well Maintained And Marvellous Condition
* Accident Free
* Full Original Condition
OMV S$ 7,445
Depreciation S$ 1,705 / year
Registration Date 25/04/2006
COE Expiry 24-Apr-2016
Number of Owners 1
Mileage 22,000 km
05 Mar 2009
COE (CAT A):
S$ 4,890 (Last updated: 04 Mar 2009)
The price showned in USED CAR ad is the total price that I need to pay? Does it include the COE? I find quite confusing to read the ad.. Need separate MOV payment or it alraedy included in the price stated? If the Total price is 0k or below, i plan to pay by cash.
Otherwise, anything above 20k i need to take up loan. The new car price included COE? The ad states price is inclusive of registratration, road tax, etc.. But i dunno the registration meant for COE or not."
Well, a used car should always be cheaper than a brand new car since the valuation will fall steeply in the earlier years of usage. The other exception is when COE quota premium increases offset the depreciation.
You should check with the used car dealer about the advertisement and get the breakdown details of all payment components. One additional payment for used car is the transfer fees payable to LTA. The price $13,500 does not result in a depreciation of $1,705 over 7 years; it should be $1,397 if $13,500 is the final price you pay. I believe that $1,705 includes the loan interest, transfer fees and others.
If you buy the Picanto new, your depreciation is $2,628 per year over the 10 years. Your consideration should be centered on the condition of the used car. If it is very road worthy and free of maintenance trouble, the used one is an obvious choice from the economic perspective. You can use the tool at my blog post Total Cost of Ownership to understand how much you will have to spend on each option.
Hope this helps. Remember that you have to pay a premium to have a new car...