Prices of brand new cars in the Philippines have gone up, following the higher excise taxes imposed by the TRAIN or tax reform law. And with a global pandemic affecting everyone's financial capabilities, it's now easier to choose between a brand new or second hand car.
Because of this, second hand car dealers are expecting more Filipinos to turn to the used car market, at least for the next three to four years. It makes sense—with a limited budget, your choices could as well be limited to the affordable options.
Used cars are obviously the cheaper alternative, but is it really wise to buy a second hand car than a brand new one? Or is it the other way around? The right choice varies from one car buyer to another.
Brand New or Second Hand Car: Comparing the Costs
Before we split hairs between new and used cars, let's find out what they're worth first. Here are the top car models in the country and their corresponding prices derived from the latest figures from Autodeal.
Brand New Price: PHP 568,000 - PHP 700,000
Second Hand Price: PHP 310,000 - PHP 580,000
Arguably the most popular small car in the Philippines right now, Toyota Wigo has also become a popular choice for budget-conscious car owners. It is also relatively cheap when it's brand new, which means you can expect more savings when you buy a used or repossessed one.
Brand New Price: PHP 681,000 - PHP 1,035,000
Second Hand Price: PHP 328,000 - PHP 791,000
Are you in the market for a sedan? Whether you're buying a brand new or second hand car, the Toyota Vios provides the most bang for your buck. There's a reason why this model is the best-selling car in 2020 so there's no doubt it will endure even in the midst of a pandemic.
Check our article about buying a new car in the Philippines.
Brand New Price: PHP 848,000 - PHP 1,058,000
Second Hand Price: PHP 220,000 - PHP 748,000
If you're looking for a car that has the right balance of affordability and fuel efficiency, then consider getting a Honda City. Aside from using it for your everyday drive, it's also a great option for car owners looking to apply for TNVS services. Either way, the Honda City is a great fit.
Brand New Price: PHP 1,008,000 - PHP 1,175,000
Second Hand Price: PHP 635,000 - PHP 950,000
Hatchbacks are perfect for big families and carpooling purposes. So if you're looking for one, add the Mitsubishi Xpander to your list. If you don't want to spend more than a million, your only option is to go second hand. This article can give you tips before buying a used car.
Brand New Price: PHP 1,155,000 - PHP 1,728,000
Second Hand Price: PHP 370,000 - PHP 1,258,000
Big cars requires big bucks and that's exactly what you'll get with the Ford Ranger. You'll definitely have to consider if you want a brand new or second hand card because it will set you back either way. But in the end, you'll get a sturdy vehicle that will last you ages.
5 Reasons to Buy a Second Hand Car
Checking out second hand cars for sale in the Philippines? A used or pre-owned vehicle is a better option for these situations.
1. You Can't Afford Your Desired Model
If you have a specific vehicle year, make, and model in mind but its brand new version doesn't fit your budget, go for the next best thing: a pre-owned unit sold at a much lower price.
Buying a second hand car typically saves you around 10% to 70% of a vehicle's original price, depending on factors such as age, mileage, and condition. If your budget permits it, you can even upgrade to a better model.
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2. You Prefer to Pay in Lump-Sum Cash
Hate to pay the interest plus monthly installments on a car loan? If you can pay the full amount of a second hand car in cash, then go for it! You'll get to save more that way with a second hand car vs. a brand new car, as long as the unit is in good condition.
3. You Want to Buy a Phased-Out Model
Buying a brand new car isn't an option if you want to drive home a particular classic or discontinued model. For instance, you can find a car as old as a 1968 Volkswagen Beetle in the used car market for PHP 100,000 or less. In contrast, a new 2017 Beetle costs around PHP 1.6 million.
Vintage car enthusiasts, in particular, are the ones who benefit most from buying used cars.
4. You Want Lower Car Insurance Costs
Still on the fence between buying a brand new or second hand car, consider the car insurance costs. And an advantage over the latter is that it is cheaper to insure. Car insurance companies consider a vehicle's age and fair market value when computing insurance premiums.
The higher the value of a car, the more expensive it is to repair the unit after a collision. But some insurance providers don't accept applications for vehicles older than 10 years, so consider that when buying a second hand car.
Looking for affordable auto insurance? Compare insurance rates from different comprehensive insurance companies in the Philippines with the help of Moneymax!
5. You Plan to Resell the Car in the Future
When you buy a new vehicle, it loses 20% to 30% of its value as soon as you drive it off the dealership. In the first three years of owning the car, it may depreciate further by up to 50%.
Used cars depreciate less than brand new cars. That's the greatest benefit of a second hand car purchase—the previous owner of the car has taken the largest depreciation hit.
While you, the new owner of the used car, will enjoy a low cost-to-resale ratio. This means you can sell the second hand car later for almost the same amount you paid for it, as long as you keep it well-maintained. If you have it customized, fixed, or upgraded with new features, you may even resell it for a higher price.
5 Reasons to Buy a Brand New Car
On the debate of whether to buy a brand new or second hand car, many buyers still favor new vehicles despite the higher prices simply because these units have never been used. Here are other reasons to purchase a brand new car.
1. You'll Purchase via a Car Loan
Although a full upfront payment on a vehicle can save a buyer from paying interest, getting an auto loan can help make financing a car easier through monthly amortizations. If you plan to buy a car through an auto loan, you can cut down the interest payment and get a longer repayment term by choosing a brand new vehicle.
Interest rates for new cars are lower than those for second hand units. For example, BPI auto loan interest rates for brand new cars range from 4.10% (12-month loan term) to 27.28% (60-month term). Pre-owned cars come with higher interest rates at 6.57% (12 months) to 44.17% (60 months).
2. You Need a Car ASAP
It takes a lot more time and effort to choose between buying a brand new or second hand car. From researching your options up to making the purchase, searching for used cars tend to be a longer process. No salesperson can assist you, so you've got to do all the legwork by yourself.
On the other hand, purchasing a brand new car is a breeze. Once you've picked a specific model, all you have to do is visit a showroom and talk to a sales rep. This saves you time and energy throughout the car purchase process, which is especially helpful when you need a car right away.
Read more: Top Places to Score New Wheels
3. You Don't Want to be Bothered with Frequent Repairs and Maintenance
The biggest advantage of buying a brand-spanking-new car? Zero defects (in most instances). And if there's any, the new car is covered by the manufacturer's warranty.
With a used car, expect to make more frequent trips to the auto repair shop, as old car parts tend to break down faster than new ones. That could be a big hassle if that's the only car you have, and you drive it to work every day.
4. You Want to Save Money on Gas
Newer models generally have better fuel mileage than older models. So if you're trying to reduce your fuel costs, it's easier to achieve that with a brand new car.
However, some older models are fuel-efficient, according to Consumer Reports. If your desired model belongs to the list, check if a second hand unit is on sale.
5. You Have No Plans of Reselling the Car
Want to keep driving your car for years until it reaches the end of its service life? Then the car's resale value in the future won't matter to you as much as someone who plans to sell his car later.
Cars depreciate over time, and there's no stopping it. But if you simply want a reliable car that can last you for years, then buying a brand new vehicle makes more sense.
Should you buy a brand new or second hand car? No right or wrong choice for everyone—it all depends on your budget and preferences. May this guide help you decide what the right vehicle purchase is for you.
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