New vs pre-owned car: Total cost of ownership key for buyers

A budget of Rs 10-15 lakh for a car forces buyers to choose between a new lower-end model or a pre-owned higher-end model, according to livemint.com. Financial experts advise comparing the total cost of ownership over the holding period, not just the purchase price. Key factors include depreciation, financing costs, insurance, maintenance, warranty and resale value.

Used-car loans carry higher interest rates than new-car loans, narrowing the initial price advantage. For a Rs 10 lakh loan, the EMI on a new car at 9.2% for seven years is around Rs 16,190, while a used-car loan at 11.75% for five years yields an EMI of about Rs 22,100, said BankBazaar CEO Adhil Shetty. Experts also caution that a cheaper used luxury car may have higher repair costs, and buyers should inspect service history and accident records.

The right choice depends on how long the buyer intends to keep the vehicle and their tolerance for maintenance uncertainty. For luxury cars, a three-year-old well-maintained model with warranty remaining can be a better proposition than an older cheap one, experts said.