[Beginner Driver’s Guide] Should You Buy a New or Used Car? | Car Purchase Procedure | Things to Note When Buying a Car

New Cars

Used Cars

Price

• Transparent and fixed price

• Vehicle price is relatively high

• Price fluctuates

• At least 30% cheaper than new cars

• Depreciation is less severe, making it hold its value better

Maintenance and Upkeep

• Brand new inside and out, clean and fresh

• Comes with warranty from the manufacturer but requires regular inspections at authorized service centers

• Factory-tested before delivery, minimizing the likelihood of issues

• Replacement parts may need special ordering

• Vehicle inspection is only required after six years

• License fee must be purchased

• Exterior may have damage or scratches, requiring minor repairs

• Some used cars sold by dealerships are factory-certified and come with extended warranties

• Older models may have more accessible and affordable parts, maintenance, and cosmetic options

• Older vehicles are prone to wear and tear, increasing the likelihood of repairs

• Test driving is essential to avoid purchasing problematic "cosmetic cars" (old gears disguised under a new appearance) or vehicles with underlying mechanical issues

• Parts for older models may be difficult to source and replace

• Classic cars might incur repair costs higher than the purchase price

• If the car is close to six years old, it may soon require mandatory inspection

First Registration Tax / License Fee

• New cars require the payment of a first registration tax, which is calculated based on the retail price

• Electric private cars qualify for a first registration tax concession, capped at HKD $58,500

• If replacing an old non-electric private car with a new electric private car ("one-for-one replacement"), owners can enjoy a first registration tax concession, capped at HKD $172,500

• No need to pay the first registration tax unless it's a used car imported from overseas, in which case registration is required with the Transport Department

• Most registered vehicles currently in use already have a license fee paid (duration depends on the expiration date)

Insurance Costs

• Comprehensive insurance is preferred for new cars, which has a higher premium

• For non-luxury models, third-party insurance is commonly chosen, resulting in lower premiums

Handover Process

• For vehicles in stock, the handover process can be completed within one to two weeks

• For popular models, delivery time ranges from 3 to 6 months

• Transfer of ownership depends on both buyer and seller; it can be completed within 30 minutes

• Must visit the Transport Department's licensing office in person to handle the transfer

Advantages

Disadvantages

Petrol Cars

• Wide variety of models to choose from

• Flexible pricing options

• Easy to find petrol stations

• Not eligible for the "one-for-one" tax concession

• Emits exhaust gases, causing environmental pollution

• Requires regular maintenance and replacement of wear-and-tear parts

Electric Cars

• Zero emissions, aligning with environmental trends

• Not affected by rising fuel prices

• Eligible for the "one-for-one" tax concession

• Requires time for charging

• Maintenance and repairs must be done at authorized service centers

• Insurance premiums may be higher than petrol cars

Hybrid Cars

• Battery is charged by engine power, no need to visit charging stations

• Air conditioning can run without starting the engine

• Battery deterioration over time

• Higher maintenance costs compared to petrol cars

• For long-distance driving, energy efficiency is worse than electric cars

New Cars

Used Cars

Step 1. 

Choose a car

• Visit showrooms to select a car.

• Schedule a car viewing through acquaintances, online platforms, or used car dealers.

• Pay attention to the manufacturing year (car age), number of previous owners (transfer history), mileage, and license fee expiration date. Generally, the lower the numbers, the higher the value.

Step 2. 

Test-drive

• Focus on whether you like the car model and its driving performance.

• Check for any unacceptable flaws in the car's exterior.

• Test basic operations such as the braking system, window controls, electronic indicators, and tire conditions.

• During the drive, listen for any unusual noises.

  What to look out for when test-driving a new/used vehicle

Step 3.

Inspecting the Car

• No inspection required.

• After agreeing on the price with the seller, you can contact an inspection professional to visit the used car dealership for an on-site inspection.

• Alternatively, you can request the seller to accompany you to a workshop for a detailed inspection (commonly referred to as "lifting the car") to ensure the car hasn’t been in a serious accident.

• Avoid paying a large deposit before the inspection, but you may pay a small earnest amount (e.g., HKD $1,000).

• If the vehicle is in good condition, the inspection process typically takes half a day.

Step 4. 

Signing the Contract

• If satisfied with the test drive, pay a deposit.

• Sign a provisional sales agreement with the seller.

• Ensure the contract specifies:

  1. The vehicle is free from loans or liens.
  2. The vehicle is not under any car club membership.

Step 5.

Purchasing Car Insurance

• Choose an insurance company and provide the car chassis number to your insurance broker (usually found in the sales agreement).

• The insurance broker will issue a temporary policy, which you can forward to the car dealer to handle licensing and registration procedures.

• Obtain a copy of the car registration document from the seller for purchasing insurance.

• Keep the temporary policy with you on the day of the ownership transfer.

Step 6. Vehicle Transfer of Ownership

• The dealer will handle the registration process.

• Both buyer and seller sign a transfer of ownership notification form and visit the Transport Department to complete the transfer.

  Steps in buying a used car and precautions to take in 2025

Step 7. 

Finalizing the Transaction

• Ensure the car dealer has all necessary documents, including the original registration document (if under financing, only a copy will be available).

• Verify there are no significant issues with the car, such as severe scratches or unreasonable mileage.

• If major issues are found, the buyer has the right to refuse the transaction.

• If no problems are found, proceed to pay the remaining balance.

• Pay the balance and collect the car keys after the ownership transfer is complete.