Refurbishing an old car vs buying a brand new car

One of the age old car buyers debates is which is better- refurbishing an old car or buying a brand new one? While the primary considerations for this move are price and sentimental value (nostalgia), we look into other factors that can help you choose the best option. So when is the time to let go of your old car and purchase a brand new one? Firstly, let’s see if your car can be resold for a higher price.

Appreciation and Depreciation

Depending on your purpose for buying, getting a brand new or used car could work to your advantage if you understand these two factors. In general, brand new cars (and even used cars) depreciate overtime if they are mass manufactured models. If a car leaves a dealer's showroom, for example, it has already lost up to 20 percent of its value. There are, however, a few exceptions. Old cars which have a certain history (mostly luxury cars) or cars that have been owned by a famous figure could have their prices appreciate, especially if they are still in good running condition. One good example is the 1962 Ferrari GTO, a collector's car, which is considered the most expensive car to have ever been sold at auction at $34.65 million. However, if yours is one of those production models- here are some tips to help you decide whether you should still repair or refurbish it or buy a new one.

Wear and Tear

Even if your car is of a quality build and was taken good care of- it still cannot avoid the signs of wear and tear over time. Some car components that can deteriorate quickly include the brake rotors, axle boots and timing belt (commonly in cars with high-mileage). At around 145,000 to 190,000 miles, these signs of ageing are very common to cars. At this point, most car repair servicemen recommend that the car’s water pump be replaced. It is also a moment to decide what exactly the purpose of the car is in the long run. Some families still consider their first car a family heirloom which should be passed on to their children at least. Make a rough calculation and decide whether fixing the car would still be worth it or if it is already costly for the family’s budget. Here is another great hint; low mileage is the last thing that can boost the value of your car- a used car is still second hand whether it has hit the road often or not.

Age of the car

Some cars have less resale value compared to other car models. In the Philippines, some of the factors that contribute to this are the brand of the car, its reliability history, availability of spare parts and popularity (or demand) for the car. Some of the car models that have a high resale value are the Honda Jazz and Hyundai Azera. It is almost always cheaper to repair an old car than to buy a new one. However, this applies mostly to cars that are ten years old and younger. Any older and you might find the repair cost, over the span of years, to be the price of a decent entry level hatchback. The older the car, the lower its fuel efficiency rating is also.

Added options

The assumption that added car dealer options such as spare tire covers, a leather interior, entertainment systems such as LCD screens, and a navigation system, etc. could increase the value of a used car is false. It only increases incrementally and buyers will still look to see if the car will run based on their expectations. If you have decided to trade in your car or sell it, one of the things you can do is make a mental calculation of how much the equipment could add to the value of the car versus how much you could save if you uninstall them for future use. As you consider these factors, let us listen to the most common arguments that people use to justify buying a brand new car or repairing an old one.

Arguments for buying a new car

Buying a brand new car is pricier; however, you are assured that you can get a unit that can last longer. Be warned that some fresh cars from manufacturers may be defective. If you have noticed some defects on your newly purchased vehicle, you can use the Philippine Lemon Law to ask your car dealer for a repair or replacement. Owning a car in the country has been made cheaper. Some manufacturers offer affordable down payment options (from P20,000 to P200,000 for hatchbacks and sedans) that can be paid back in a 30 to 60 month installment plan of less than P10,000 to P50,000 per month. While this option may be cheaper at first glance, it also has an added interest of up to 15 to 35 percent and sometimes more.

Arguments for refurbishing an old car

Buying an old car and refurbishing it can be a lucrative investment if you pick the right car. However, it often takes time for the value of the car to appreciate. It is also hard to find buyers of certain cars, especially in an unpredictable market. On the other hand, vintage cars have a certain appeal around them because of their rarity and “blast-from-the-past” concept and style. Some car owners also rent their old car models for car shows or weddings. If you own an old car model, the best thing you can ask is whether this car could appreciate by the next generation, twenty or thirty years from now.