Demand for pre-owned vehicles is constantly growing and the ratio of used cars compared to new cars is expected to double by FY251[source].
Owning a car in an Indian household is getting increasingly common especially with the rise in younger population and increase in middle-class & upper middle-class population. Studies show that in FY 2021, the pre-owned sector in India stood at 3.8 million units, making it 1.5 times bigger than the 2.6 million units new car market in the same year!
During the pandemic, with the increased number of people preferring individual mobility and more finance options infused into the used car market, the market is set to grow considerably. With the sales and production of new vehicles hindered due to the pandemic, the immediate option for the buyers is the used car market.
There are several advantages of buying a pre-owned car besides it being a financially prudent decision and we will list them down here for you so that you can make an informed decision.
- Affordability
One of the main advantages of buying pre-owned cars is the price. Depending on the kind of car you are looking to buy and your budget you can pick a car of your choice. This idea is especially helpful if you are looking to buy a luxury car. As per automobile dealers, the demand for used luxury cars has been growing at approximately 35% – 40% on a year-on-year basis, as owners of luxury cars usually sell off their vehicles after a year or two years. For instance, the price of a Mercedes-Benz SLK first hand starts at 80 lakhs, whereas you can get a second-hand model starting at 55 lakhs.
- Good option for a second car for the house
These days, with greater mobility and different areas that the family members need to travel, using the same car is usually not the best option. In such cases, we find it increasingly common for most houses to own more than one car. Buying a pre-owned car is good option in such cases where you do not have to spend much for an additional car.
As per studies, over 75% of used cars purchased are sedans and hatchbacks due to their practicality and low-maintenance costs.2[source]
- Rate of Depreciation
Depreciation is the decrease in the value of a car over time, which means that if you were to sell your car you will get a price lower than that you spent on acquiring it. In case of pre-owned cars, the depreciation rate is low, because the bulk of it has already happened. The depreciation rate is highest in the first two years of buying a car.
- Taxes
Besides paying for the vehicle, a person must also pay additional taxes like GST and road tax. These taxes are not applicable when buying a pre-used car.3[source]
- Loan & Cost of Insurance
The calculation is simple here, if the price of car is lower, you will take a small loan leading to you paying lower interest amount. Moreover, the cost of insurance for old cars are lower than that of new cars.
- Warranty
Warranty for pre-owned cars is offered by most sellers, however, it is advisable to get the necessary checks to be done before purchasing a pre-owned car. These days whether you are purchasing a used car from platforms like Cars24, OLX, True Value, Spinny or any other Used- Car sellers from your city, most of them offer a guarantee for the car for 6-12 months.
- Greater Options
With more options available within a particular budget bracket, the customers have a wider variety of cars to choose from.
- Try it Out
Owing and maintaining a car is not easy. It is to a great extend a life-changing decision given that it impacts your day-to-day movement. A used car helps you ‘test-drive’ a life as a car owner. Say for instance how confident are you of driving your own car? Can you afford a full-time driver? Are you ready for the additional sim-annual or annual expenditures which accompanies buying a car, etc. A used car will help you answer these questions without you making a huge financial commitment.
Not surprising, but the pre-owned car industry in India is expected to clock a growth rate of 15% in the coming year.4[source] As per the study, smaller towns will fuel the demand for second-hand cars, with the share of non-metro cities in used car sales expected to rise from the current 55 percent to almost 70 percent, four years into the future.5[source]
In a city like Bangalore where public transportation system is still developing, private cars become somewhat of an imperative. There is no dearth of pre-owned cars in Bangalore, and you can always avail Alphation Auto’s service to maintain your car in top condition. A thorough computer search can help you buy the best pre-owned hand cars in Bangalore. We believe this article would help you in making an informed decision.
Reference (Source) Links:
1. https://www.timesofindia.com/
2. https://www.mordorintelligence.com/industry-reports/india-used-car-market
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