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Treasure or trash? Why buying pre-owned cars can make sense

Mark Policarpio · Mar 26, 2023 02:30 PM

Treasure or trash? Why buying pre-owned cars can make sense 01

Given the sad state of our public transport system, most people seeking unhindered mobility will invariably consider a car. It’s the logical conclusion since most buyers have other people in their lives to consider; for some, it could be a spouse and children; for others, their parents or a significant other or others (you know what they say about four doors)

But one thing that might complicate the decision would be whether to buy used or new. “But Mark, that’s a no-brainer. Of course, you buy new so that you don’t have to deal with the potential headaches of used cars.”

Usually, that is the case, yes, but these days, car prices have nearly doubled since 2018. What was once a Toyota Fortuner (Specs | News) that would cost you just ₱1,600,000 in 2017 now costs over ₱2,000,000, and most families aren’t ready to spend that much on a car that will experience hard use the moment it leaves the dealership.

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There are several excellent reasons to buy used - so many that I recently purchased a used vehicle for my family’s daily use: A 2018 Volkswagen Caddy. This 7-seater minivan came when my family needed something with more than five seats, and it just so happened to be powered by a 1.6-liter turbodiesel. As a recent used car buyer, here are the benefits and pitfalls of buying used.

Defeating depreciation

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There’s a saying that most of the older generation will know, but that still rings true today: The moment your brand new leaves the dealership, you already lose 20% of the car’s value. After each year of ownership, you lose 10% of the purchase price until the vehicle reaches two-thirds of the original value.

For example, my family had considered a Volkswagen Caddy in 2018 when we were first looking for a new car. At the time, the Volkswagen dealerships in Metro Manila had stopped displaying them in favor of the SAIC-VW models, but they had these in the back - you know, where all the good stuff is.

The agent said that the particular 2.0L TDi we were looking at would come to around ₱1,490,000, which was just fine for what we needed it for. Without going into detail, that wasn’t what we got. Instead, we bought a Volkswagen Golf GTS wagon for the same price.

Fast forward four years later, my family had just gotten out of a relationship with a Suzuki Ertiga (Specs | News), and we quickly realized we couldn’t make do without a seven-seater.

As we considered the implications of buying a brand new Toyota Innova (Specs | News) for ₱1,600,000, I had a brainwave and recommended looking on the secondhand market for a Volkswagen Caddy.

My father entertained the thought, primarily because we had had an exemplary ownership experience with our Golf wagon.

A quick search on Facebook Marketplace yielded a too-good-to-be-true ad for a red 2018 Volkswagen Caddy 1.6 TDi Trendline with just 44,000 kilometers on the clock. Usually, that would be a turn-off, but the price was a hair under ₱700,000 - a price even my frugal mother could not overlook.

Hidden gems

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What was too good to be true turned out to be true. As advertised, the car was in excellent condition and came with just a little over 44,000 kilometers on the clock. Save for aesthetic issues. Thanks to those minor imperfections, we purchased the car for a little less than the asking price.

That’s the great thing about depreciation – it makes even slightly older cars much cheaper. Where else would you find a vehicle that’s only four years old but being sold for less than half its original value?

Depreciation has this fearsome reputation because people always view it from the perspective of a brand-new car instead of buying a used one.

When you buy new, your car’s value immediately drops when you’re out of the dealership. That value steadily decreases over time – wear and tear on a vehicle and any unfortunate incidents will affect its value.

But when you buy used, all that depreciation has already happened. The car’s value has already dropped to a point where it won’t get any lower, making it a decent option for both purchase and resale because whatever you spend on buying it, you’ll most likely get most of it back when you decide to sell.

True value

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Aside from just the monetary value of a secondhand car, another would be the value of the vehicle itself – van, sedan, SUV, whatever it may be.

For example, the 2018 Caddy we purchased for less than ₱700,000 has seven seats, a 1.6-liter turbodiesel engine, cruise control, Bluetooth, tire pressure monitoring, and not much else. Still, it’s nearly impossible to find anything with that combination of features and specs for that kind of money. For a brand new unit with the same specs, at best, you’d be looking at forking out 50% more than the used car’s price.

And that’s the benefit of buying used – you have these bargains that make a lot of sense. Suppose this is the type of car you need, often they won’t cost more than the cheapest brand-new car you can think of, much less the cheapest one that will suit your needs.

A variety of choices

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When it comes to choice, the secondhand market is, unfortunately, less extensive. It’s not that there aren’t enough places to look for them, but what you might want isn’t what someone else wanted a few years ago.

And that’s the first issue with buying used – you can’t pick and choose what you want because someone already did the picking and choosing. Depending on the type of car you are looking for, the chances of it not being exactly the one you want are high – be it a specific radio or an engine option you want.

But if you are working on a budget instead of a particular vehicle type, the doors open up quite wide.

The cost of maintenance

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Servicing your vehicle is a certainty. And that gets harder when you buy a used one because it is an older unit.

On top of this, you might find that there are undisclosed or undiscovered niggles and issues with whatever you’re thinking of buying – not everyone takes meticulous care of their vehicles, after all.

With this Volkswagen Caddy in particular, aside from the minor issues we saw, we were pleasantly surprised that the previous owner had already taken it in for a service at the VW service center in Mandaluyong. This discovery indicated that the owner followed the maintenance schedule very well.

However, some things still didn’t get addressed until the money exchanged hands, like a part that broke two months into ownership. It wasn’t a big part, nor was it that expensive, but it was still an expense that wouldn’t happen had it been bought brand new.

Alas, it was a necessary expense, and if that was the only cost associated with having an as-new, secondhand car, then my family and I could walk away happy.

What should I get?

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If all this talk has gotten you interested in purchasing a secondhand vehicle, then a good idea is to go through what you want to get out of it in the first place.

  • Are you buying it as a means of transportation?

  • Do you have specific needs it must address?

  • How old of a vehicle are you considering?

Pro tip: Look for something less than five years old. Most daily commuters in this category and age bracket will show minimal signs of wear, and the dealership can still solve any issues without incurring too much cost.

If there’s anything you should take away from this article, it is this: you shouldn’t discount the secondhand market immediately – especially in today’s brand-new-car-dominated marketplace.

Take a look around, inspect some cars, and ask some questions. All it will cost you is your time, and trust me, it can be worth it.

Mark Policarpio

Contributing Writer

Mark has been into cars since he was in kindergarten, and he carried that into his college life studying as an Engineer. His outlook on life is the same as his outlook on cars - "When in doubt, power out!"

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