Why rich people buy second hand car and average people buy new car?

If you were to tell that to everyone in Singapore, probably 9 out of 10 will laugh it off. How is it possible? Let’s hear some analysis from the internet forum. Maybe you will get an understanding.

There’s this friend of mine, who works in a car firm. He mentioned in a chat that there’s a significant portion of rich people who rather choose to buy a second hand car over a new one. On the flip side, there’s this group of middle income people who would oppose the idea of getting a second hand car.

Let’s do the math. This first group of people is on the increase, more than 50% in fact. But what are the real reasons?

First, it is affordable. All the branded cars like Porsche, Audi, Mercedes, BMW…their original pricing, around $500,000 and above, have more or less dropped to half. And it comes with a loan, not a bad deal when buying a new car with hidden costs. Normally, the second generation rich change car like change underwear, so that’s why they don’t really feel attached to the idea of buying a new car!

The rich also know that the car is a liability. They would rather use the savings from buying a second hand car for investment purposes. Now, that’s a win-win situation, isn’t it? The other group would counter by saying that buying a car is a big life decision, just like choosing a wife. So why buy a second hand car, just like marrying a divorcee?

Hence, they would rather bite the bullet and choose to buy a new car. After all, it is a face-saving exercise too! A car, well, is simply one that takes you from point A to point B. So, what’s the point? If really want to show off, why not buy a second hand BMW, give it a new coat of paint and can say it’s a new one? Ha!

Now here’s a piece of advice – for both groups actually. For those on a tight budget, or have a better financial plan, it is still best to go for a second hand car. A new car, once bought, instantly becomes a second hand car.

Moreover, when a second hand car is put on the market, it goes through a lot of stringent checks like its maintenance record, mileage, etc. This is to ensure the car can get a better pricing.

If 1 million dollars drop from the sky, the poor will be happy. He will rush to the car mart and buy a mid-range luxury car for a few hundred thousand. The stock market is doing well too, and he also plonks some few hundred thousand into it. He will also buy some life savings bonds, just to get its interest. The rest, he just splurges on travelling!

10 years later, his car would have depreciated to 50% of its original value. His stocks have all been wiped out. His bonds are doing okay, good enough to sustain his lifestyle. To sum it up, he still has half of the 1 million dollars, a heavily depreciated car and some travel photos.

If 1 million dollars drop from the sky, the rich will be super happy. He will analyse the property market, and put down 20% of it on an apartment, the other 20% on stock market bonds, and 45% on a trading fund. He will use the spare remainder on a second hand car, and use it to bring his family around on weekend getaways.

Ah, that’s life. In ten years later, his property would have doubled. The stock market bonds have doubled in value, and his value has increased way too much. What about his car? It’s been sold, and every year, he will bring his family to Europe for vacations.

Understand the message? Why not share this article?

Facebook Comments