2023-10-14 15:22:37
People who plan to own a car often face many contradictory opinions that leave them confused, especially when it comes to choosing to buy a new or used car.
Although many buyers have a very specific idea of what they want to find in their desired car, there is a significant number of people who seek advice regarding this step, which is considered the second most important financial decision an individual makes following the decision to buy a house.
While the financial budget is among the most important factors that determine the answer to the question, “Which is better to buy, a new car or a used car?”, this rule is rejected by many people, especially the rich, as a large portion of them consider that the decision to buy a new car is… The worst financial decision an individual can make because it causes a waste of money.
Therefore, we see that there are many wealthy people in the world, such as Warren Buffett, Alice Walton, Steve Ballmer, and Jack Ma, who drive old cars to satisfy their need for transportation, without the need to show off forms of luxury in front of others.
In turn, self-made millionaire David Bach, one of the most trusted financial experts in America, says that the value of the new car begins to decline, in the first minute of leaving the showroom and being driven by the buyer, losing regarding 20 to 30 percent of its value, by the end of the first year. of its purchase, as this percentage increases to 60 percent within five years of its purchase.
According to Bach, what makes matters worse is that most people borrow money to buy a new car, which means that their loss will be greater, given the cost of interest on the loans, and therefore all the mentioned elements make the decision to buy a new car the worst financial decision an individual can make. To take it into his life.
The used car market is gaining increasing popularity in the world, and this has prompted major companies operating in this field to increase their investments and expand their business, as the Asia-Pacific region was the largest region in the used car market in 2022, and it is also expected that this region will be The fastest growing in the coming period.
The value of the used car market in the world reached more than $1.2 trillion in 2022, and is expected to grow to more than $1.3 trillion in 2023, and to reach $1.8 trillion in 2027, according to Research and Markets, a market research company.
Available data show that the year 2022 witnessed the shipment of more than 106 million used cars, compared to the sale of regarding 57.4 million new passenger cars during the same year, according to estimates by the International Organization of Automobile Manufacturers (OICA).
In an interview with the “Eqtisad Sky News Arabia” website, Muhammad Musa, an expert in car trade, says that the decision related to choosing to buy a new or used car is a difficult decision, and what increases its difficulty is that customers face a lot of confusing information and advice, considering that most people want In buying a completely new car, but when thinking regarding the matter from a logical perspective, and listening to the opinions of some financial experts, the individual is certain that taking the step of buying a new car, despite the great attractions it enjoys, is a step that will cause inevitable financial loss.
The new car loses 40 percent immediately following purchasing it
According to Moussa, experts believe that the step of buying a new car does not qualify as an “investment decision,” like the step of buying an apartment. Investment is simply putting money in an asset with the aim of generating additional income from it, by increasing its value in the future. Therefore, by simply looking at The huge losses incurred by the value of the car, which may exceed 40 percent two years following purchasing it, make the individual certain that this step is not at all related to any form of investment, as some claim.
New cars are more reliable
Musa reveals that the strengths of new cars are that they are more reliable than used cars, as they guarantee the buyer complete peace of mind, and this means that the customer can drive his car, without worrying regarding hidden or mechanical problems related to the age of the car, unlike what happens. When purchasing a used vehicle, new cars also face fewer maintenance problems, as the customer does not have to think regarding replacing brakes or tires, or doing any other minor repairs for at least a few years, whereas if a new car faces some problems due to manufacturing defects The manufacturer undertakes to repair it under the warranty contract that was presented to the customer upon purchase, which provides more peace of mind.
Moussa believes that the step of purchasing a new car may make the individual more reassured, but the truth is that the buyer will find that the cost he paid in the end is much more expensive than what was initially calculated, as this decision requires paying a large sum of money, which may not be apparent. In the beginning, such as the cost of taxes, insurance, and annual interest, in addition to the element of the car losing its value, as soon as it leaves the showroom, this is precisely what drives many billionaires to exploit their money more effectively, by contenting themselves with owning old cars, as long as it guarantees them safe transportation. .
Good deal for the second buyer
For his part, the writer in economics and investment affairs, Dr. Mazen Majoz, said in an interview with the “Eqtisad Sky News Arabia” website, that when a customer buys a used car, the first owner will be the one who incurs the largest percentage of loss, while the second buyer gets a good deal. Pointing out that a new car usually loses regarding half of its value during the first 3 years of its purchase, and following that the rate of loss becomes much slower, which means that a 3-year-old car will lose much less value in the fourth year, compared to what it loses in the previous years. The first three.
Big risk
According to Majoz, the used car market is witnessing increasing demand, especially from those with low and medium purchasing power, in addition to some wealthy people who consider that there are things more important than buying a new car and incurring losses because of it, stressing that the most important thing that must be taken into account when buying a car. Used, is to conduct a comprehensive and accurate mechanical examination on it, to ensure that its structure does not suffer from any defect, and to avoid the appearance of mechanical faults shortly following its use, as purchasing a used vehicle is sometimes a big risk, and therefore one must be completely sure of what is being purchased.
Majouz also stressed the necessity of inspecting a car that is 6 years old or older very carefully, to ensure that it has been taken care of, in a way that reduces the possibility of it being exposed to malfunctions, pointing out that the main considerations that prompt many to prefer used cars over new ones, vary between lower price The slower loss rate, lower registration fees, lower insurance costs and lower maintenance costs, in addition to less stress. Buying a new car puts a lot of pressure on its owner’s nerves, for fear of being involved in an accident, especially during the first period of purchasing it.
Majouz advised people who insist on buying a new car to wait for the sales season carried out by companies, to get rid of their stock of unsold cars, so that they can buy a new car, and reduce the percentage of direct loss that begins from the moment the customer receives it.
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