Edmunds has an interesting infographic illustrating how much a brand-new vehicle depreciates over time. One of the most troubling, albeit unsurprising, pieces of information it contains is that brand-new cars lose 9% of their value within one minute of purchase. Within two years, a new car will have depreciated 31% and, by the fifth year, it will be worth only 40% of the purchase price.

This is probably why you’re here, researching how to buy a car in the UAE – particularly how to buy a used vehicle.

Why Buy a Used Car?

A new car depreciates more in the early years than in the subsequent years. Below is Edmunds’ data on how much a vehicle depreciates annually until year five.

• 19% by the end of the first year (total depreciation: 19%)
• +12% by the end of the second year (total depreciation: 31%)
• +11 by the end of the third year (total depreciation: 42%)
• +9% by the end of the fourth year (total depreciation: 51%)
• +9% by the end of the fifth year (total depreciation: 60%)

If you buy a gently used three-year-old vehicle, you will lose 18% of its value in the next two years (i.e., the car’s fourth and fifth years). In contrast, if you buy a brand-new vehicle, you will lose 31% of what you paid for it in the next two years.

Therefore, buying a used car offers comparably better value than buying a brand-new vehicle. It allows you to avoid the significant depreciation that attaches to all brand-new cars in their first few years.

How to Buy a Used Car: Tips for Used-Car Buyers in the UAE

It would be extremely naïve to buy a car based only on looks and gut feel. Everyone wants to drive a handsome-looking car they’ve fallen in love with on the used car lot. However, remember what your kindergarten teacher told you multiple times: Judging a book by its cover is never wise.

What should you do to get a good deal when shopping for a used car in the UAE? Remember these tips:

1. Understand your needs and purpose.

Why are you buying a car? Do you need it for work or weekends out with the family? Your purpose will affect your car choice.

A daily commuter must be fuel-efficient so you don’t pay too much for gas. If it’s not a recreational vehicle and will be used primarily to ferry you and your family members to the office and school, it doesn’t need to be able to go off-road, does it? If it’s just you in it most of the time (not a family car), a compact should suffice.

As you can see, your purpose will dictate what type of vehicle you need. At the very least, it will guide you in your choice of type (sedan, SUV, jeep, van) and size (sub-compact, compact, mid-size, full-size). You can also determine the priority ranking of energy efficiency in your car-selection criteria.

2. Set a budget.

Armed with a general idea of what type of car you need, you can set a budget for your purchase. How much are you willing to spend on your car purchase? That will narrow down your shortlist and make selecting a car easier.

Note that the budget goes beyond the purchase price. A car comes with recurring costs that you must consider upon purchase. Specifically, how much can you spend on your car’s maintenance and upkeep?

These recurring costs include insurance premiums and consumables like gas, engine oil, brake fluid, coolant, and replacement car batteries. It also includes the cost of car washes, detailing, sanitizing, painting, and repairs.

Some cars will cost more to maintain and keep running. Consider that when making your used car selection.

3. Run a VIN check.

Once you have a few used car candidates, run a chassis check to verify that the vehicle identification number (VIN) is valid. Verify that the information attached to the VIN corresponds to what you can confirm with your eyes. Such data include:

• Country or region of origin
• Manufacturer
• Model
• Body type
• Restraint system
• Transmission type
• Engine code
• Model year
• Manufacturing plant code

A VIN check can also reveal linked information such as plate number and registration information.

Important tip: Don’t buy a car that is seven years old or older. You will find it difficult to get that car insured.

4. Check the vehicle history.

You must check the vehicle history. The importance of this step cannot be over-emphasized. You must know where, with whom and what the car has been through.

The things you want to confirm include:

• Past owners: Who owned the car in the past? How many owners has the vehicle had?
• Turnover rate: How long has the car been with its owner now? If it has had more than one past owner, how long did the car remain with each one? If the car frequently changed hands, you must investigate why. Was it because there is a transmission issue no car owner has been successfully able (or found too expensive) to resolve?
• Maintenance records: Has the car been regularly maintained during its warranty period? How about past warranty? Where has it been checked, and how often? What issues were found and addressed, if any?
• Legal and financial issues: Is there a lien on the car? Is it a repossessed vehicle? Is it the subject of a legal dispute?
• Accident history: Has the car ever been in an accident? When and where did it happen? What happened? Was the vehicle declared a total loss?

Vehicle history is crucial to ensure you won’t buy a car for a higher price than it’s worth or won’t inherit a car’s financial, legal and mechanical issues.

Important tip: A car history check is essential if you’re buying an imported car. It could be a car that had been written off in its country of origin because of a crash or flood damage and was brought to the UAE after cosmetic fixes.

Buy a Used Car

Buying a used car is an excellent strategy to avoid massive depreciation losses. However, make sure to do your homework and practice due diligence. A used car purchase may not be comparable in scale to a real estate investment, but it is still a considerable expense – and you don’t want to waste thousands of dirhams on a defective vehicle.

Reference:

https://www.edmunds.com/car-buying/how-fast-does-my-new-car-lose-value-infographic.html