Read the Tagalog Version of this article: Bibili Ka Ba Ng Bagong Car o 2nd Hand Na Lang?
Next to the house, buying a vehicle or a car is one of the biggest expenses a person can make throughout his life time. Many have dreamed of having their own car. Someone is buying a car for his image and status symbol but some is buying because he or she really needs it. In any case, whatever the reason, you should still consider the financial aspect and the personal aspect in purchasing (you can relate it to the 2 aspects I mention in my previous article) a vehicle. In Financial Aspect, the brand new vehicle commonly has a cash outlay requirement worth Php 40k-500k as down payment depending on the brand and model, and a monthly amortization of at least Php 8k depending also on the brand and model, to be pay within or at least 5 years (here in the Philippines). Usually, brand new car package deal with a car dealer includes the car insurance and LTO registration for several years.
While in buying a 2nd hand car, the cash outlay requirement is a one-time payment with minimum worth of Php 30k to 300k depending also on the brand and model. But aside from this, you should be prepared for the following expenses like renewal of car insurance, renewal of LTO registration and other car maintenance.
Do you really need a ride?
Before you buy a car, assess and ask yourself first: “Do I need a car?” Maybe you’re buying a car just because you do not want to look “poor” or simply to boost your self ESTEEM. If your answer is, “No, yet I just want to spend my money.” (Whoa! wait. If you simply can’t keep your money, loaned them to me and I will give an interest rate more than the rate offered by a savings account from a bank. LOL! …), maybe it’s better for you not to buy a car now. Instead of a car, why don’t you buy shares from different companies to earn more? Or instead of buying an item which value depreciates, buy other things that appreciate its value over time like land/property or jewelry.
If the answer is yes, because you really need a vehicle to work or because of difficulty in transportation try to answer the next question:
Are you going to buy a car? Do you have enough money for your daily gas allowance as well?
Okay, I know, you are already had decided to buy a brand new or a second hand car? But wait, may I ask, do you really have a budget for all of this? For your information, let me tell you that if what you have right now are just enough money for its cost, better think again. In your budget, you should consider not only the amount of the vehicle itself but also its corresponding monthly gas allowance. It’s pretty funny to think that you have a brand new car, but you cannot use because all your earnings are already gone to its monthly amortization and nothing left for the gas allowance. You should consider in your budget the amount that you can spend monthly for your car (Read my article about budgeting: How To Make a Budget Plan). The cost for the actual vehicle’s need might be too much than your expectation. In selecting a vehicle, you should also take into consideration how much will be its fuel consumption. As much as possible it’s something like 12 to 14 km per liter. So if you do not necessarily need a big car (you do not have many children for example), do not buy a van or large SUVs. Choose something small like Mitsubishi Mirage, KIA Picanto, Honda Jazz, Hyundai Getz, Ford Focus, Suzuki Alto, and the likes. Choose those that have lesser gas consumption. Something that has smaller body and you can use as your transport service to work if in case it’s within your area. Well when I say “small body car”, do not get mistaken to take and buy a Mini Cooper. You might empty your budget immediately! LOL!
Will you buy a Brand New Car? Or just a Second Hand?
There is no problem if you want a brand new car as long as you have money. A brand new vehicle has no maintenance problems, of course. So if you do not want to suffer headaches due to maintenance, sell your vehicle after 3 to 5 years. This is a common idea for those who have money –buy and sell of automobiles. Sparing their selves from any hassle of maintenance, then they buy a new one. And so you’ll see so many second hand cars that still look beautiful and not stroke out. But once you bought such thing prepare yourself to all the rehabilitation and parts replacement.
Otherwise, if you have money for such or your company will provide or help you to shoulder the payment, then why not? Go for a brand new one. However, do not instantly be attracted to car shows. Most of the times a trial ride will really impress you and makes you look or feel a lot better. Well that is what we called “Marketing strategy”. Those vehicles are cleaned, polished and beautified for all aspects to entice a buyer like you.
TRIVIA: Did you know that if you buy a brand new vehicle and take it away from the show room, that same vehicle cannot be resell on the same amount? It will immediately fall by 30% -40% from its original value (Although others claim that it can still be sold by 20% lesser, well you’re a sweet talker I guess).
When should you buy a second hand? Well of course, if you do not have a big budget. But be reminded that when you buy a second hand, it will require you not just an allowance for gas but also for car maintenance. The maintenance of vehicles is not just a joke and it is avoided by those with money so they buy a brand new one. Some of them are:
- change oil and oil filters (Around Php 800 to Php 1,000 depending on the type of oil and filter)
- new car battery change (Around Php 2,000 to Php 6,000 depending on the brand and class)
- cleaning of cooling system – radiators and coolants (Around Php 500 for the radiator and Php 200 – 500 for the coolant and distilled water)
- electrical system maintenance (Around Php 300 – Php 400 for the alternator or serpentine belt depending on the brand)
- change of spark plugs (Around Php 500 for the mechanic service including the spark plug itself but can be lower if you have tools and knowledge. Or if the mechanic is your friend. LoL!)
- additional aircon freon (Around Php 200 – Php 300)
- aircon belt (Around Php 300 – Php 400 like to alternator belt)
- tire change (minimum of Php 2,000 depending on the brand and size, Php 300 per tire for the wheel balancing, Php 100 per piece of tire cap if necessary)
- change of hydrovac for breaks (about Php 1,500 – 2,000 for a good second hand unit of hydrovac)
- And others like rubber hose, fan belts, etc.
These are the things you must consider before purchasing a second hand car. And these may vary depending on the size, brand and car model. But be noted that you should know the maintenance history from the previous owner.
Green Stickman™ Tips in Purchasing a Second Hand Car
- First of all, decide for the vehicle brand. Make sure it is affordable and within your budget. If your budget is around Php 100–300 thousand, it’ll surely able to get a better one. If your budget is around Php 70–100 thousand, it might able to get you a good but an old model second hand car like a Toyota Corolla. But if you want something lesser than this, try to look for Kia Sedan, old Mitsubishi model or Daihatsu Charade. Their price usually ranges from Php 50-70 thousand pesos for a 1990 to 2000 year model. There are still even lesser than this, around Php 30-50 thousand. But this will be an older model and surely include a lot of parts that needs to be repair or replace. It’s cheaper but it is also bundled with a lot of headaches. However, if you are an optimistic person, you will think of it as an open chance for you to learn different skills about car repair and maintenance aside from driving skills.
- Better if you knew the former owner. Someone you can easily contact in case you have to. If not from someone you know, try those vehicles from bank’s auction or car warehouse auction. Another option can be from a private owner selling their cars online like in olx, ayosdito, etc.
- In buying a second hand car, make sure to bring your own “trusted” mechanic. Someone you trust for his judgment and expertise. There are mechanics that’s able to diagnose a car’s condition simply by hearing or through its sounds. It is best to bring a mechanic on bank auction cars, because buyers are not allowed to do a “test-drive”. You are only allowed to start them, open the hood, and do a visual inspection on the car.
- Check the vehicle mileage. Mileage is the measure of how much it already traveled and we can equate it how much it was been used. The lower the number that register on the mileage counter, the better. If the mileage is less than 100k, that’s good enough.
- Check the tires. Inspect the tire’s nuts and bolts or the wheel studs. Of course, it should have a reserve wheel. Make sure it also has an early warning device approve by LTO. This device cost about Php 500 and a must have for every vehicle.
- Check for the battery, its terminal and connectors. You should have the battery warranty card. If you will buy a new one, you can still sell the old one to your car battery dealer for about Php 300 to 400.
- Do a thorough visual inspection. Inspect every part as possible like window, lightings (headlights, dome lights and signal lights), gauges (fuel, temperature, ammeter) as well as the stereo or player if there is any.
- Inspect the interior of the car as well as the car seat and seatbelt. Try to adjust and recline the front seat if possible.
- Inspect the car body for any fillings. An experienced mechanics were able to determine this by tapping the body alone. Of course, more filling means more possible dents on the body.
- Try to negotiate the price as much as you can for every undeclared part that needs to be repair or replace. Do not rush yourself into a possible headache.
- If you start the engine, it must ignite and run on your first trial. If it’s on second try, a possibilities of parts replacement. But if the engine starts after a few trials, I suggest you to find another car.
- Do a drive test and try those bending path or U-turns if possible. Inspect for any inappropriate ticking sound while running.
- Check if the car is not submerged on flood or mud. Avoid getting cars that is as if it is used in scuba diving. LOL!
- Check the documents. It should have the original copy of Certificate of Registration (CR) and Official Receipt (OR) issued by LTO. Inspect the expiration of the registration. If possible let them do the registration or negotiate the cost if it is expired. Because a registration fee is around Php 3,000 to 4,000 per year plus there is a fee for late registration. So, if for instance that it is 3 years expired, you have to pay around Php 10,000 to register the vehicle. Ask for discount if you do not want to shoulder for this, Php 7,000 may suffice.
- Check if the deed of sale is open ended (Open deed of Sale). If you want to change the ownership of the vehicle under your name, you have to have a notarized document from a lawyer. This document will state how you acquired the vehicle and how much is the amount received by the seller. However, it is not necessary to change the ownership. You can still register it to LTO even under a different name, just make sure to have a copy of the identification card of the previous owner and have a copy of ID of the agent that sold you the vehicle.
- In case that you have decided to buy, make sure to have a copy furnish of all the necessary documents inside your vehicle while leaving the original copies at home. Better yet scan them to have a PDF of JPEG files.
A second hand car is usually a first timer option. Why?? Well, being an inexperience driver might lead to minor damages of the vehicle like dents and scratches. I personally experienced them and told myself, “This is why I go for a second hand one” (LOL!). So for those who are inexperienced driver and you plan to go for a brand new one, I suggest you to go to a driving school and learn to drive well.
By the way, whether you buy a brand new or a 2nd hand car, for sure you will take good care of the car paint. If you are in the Philippines, your car will be exposed in a lot of rain showers during rainy season (car repaint is expensive too! The cheapest is around 10,000 to 15,000 pesos for small body vehicle.). To take care of the paint, better use a super absorbent towel that instantly dries your car with no streaks. One of amazing product that you can try is Aion Plas Chamois. I highly recommend this powerful cleaning tool for I have tried it myself. Try to see this video why I am recommending this:
You can even use this cloth to dry your pet after using it with your car. LOL! Actually this towel is so cool, it resists against oil and gasoline! (To know more about this product, you can follow them in their official FB page, just click here)
Well I guess we can end it here. Hope this article of Green Stickman™ helps you in anyways to choose between the two options and decide a vehicle that best suit you. Nevertheless, remember your third option will be to invest your money and take the public transport.
Remember, it’s not easy to save, so consider everything before you decide to use your savings for something that is NOT “a must buy” like vehicle. And it is always better to have your emergency fund first before buying a car.
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