What factors determine the cost of car insurance?

Your car insurance premium will be determined by factors such as your age, the vehicle model, and your driving experience. For P-license drivers or drivers under the age of 25, the premiums are usually relatively expensive.

Is a petrol or an electric car less costly to own?

Generally speaking, electric vehicles cost less to own, but the problem of lack of charging stations must be resolved.

Should you buy a new or used car + things to be careful about in 2023

Author: Kwiksure Team create date

Created On: 2021-03-03 edit date

Edited On: 2023-03-23

It is hard to own a home in Hong Kong. So if you want some personal space, buying a car may be another option. If you are a first-time car buyer, you probably have a lot of questions - should I buy a new or used car as a new driver? What is the safest way to buy a car for a new driver? Which 2023 model is the most suitable for probationary license (P license) drivers? What are the steps for buying a new or used car in Hong Kong? What should I pay attention to when I test-drive a car? And how much does car ownership cost in Hong Kong?

In the following articles, our Kwiksure experts will answer the above questions for you one by one. Today, we will first explain in detail, particularly to new drivers, the car buying process, the costs involved, and the precautions to take. We’ll also give you a few practical tips.

Should a new driver buy a new or used car?

Before you buy a car, you must first decide whether to buy a new or used car. There are pros and cons with either option, which we’ll list out for you:

Aspect	New cars	Used cars
Price	Clear prices More expensive Numerous discounts at year-end auto shows	Prices vary more Cost at least 30% less than new cars Preserve value better because of smaller depreciation at the time of selling on
Repair	New and beautiful, lower chance of needing a repair Some car dealers will provide free maintenance and repair within warranty period Leave the factory only after inspection by the original factory, so there is a smaller chance of problems occuring Parts may need to be special ordered Mandatory vehicle inspection will begin after 6 years Vehicle license fee to be paid by the buyer	There may be damage to or scratches on the body, and minor repairs may be needed Some used car dealers sell used cars that have been verified by the original factory and come with extended warranty If the model has been around for some time, the availability of parts, maintenance and appearance/upgrade services will be more comprehensive Since the car is older, problems are more likely to occur requiring repair Need to be more careful when test driving to avoid buying a car that is only good on the outside It is harder to find replacement parts for older cars If it is a classic car, the maintenance and repair could easily cost more than the car itself If the vehicle is close to 6 years old, the mandatory vehicle inspection will begin soon
Vehicle registration tax/license fee	With new cars a First Registration Tax is payable, and the tax rate is determined according to the retail price First Registration Tax concessions are available for electric private cars, up to HKD $97,500 If an old non-electric private car is deregistered and a new electric private car is registered (under the "One-for-One Replacement” Scheme), the owner can enjoy First Registration Tax concessions, up to HKD $287,500	No First Registration Tax is payable, unless the vehicle is a used car imported from overseas, in which case it must be registered with the Transport Department The used car seller may have paid the vehicle license fee
Insurance premium	Since the car is more expensive, the insurance premium is also higher	Since the car is less expensive, the insurance premium is also lower
Delivery time/procedure	If the car is in stock, it can be delivered in as little as one week, vehicle license and auto insurance included But with some models, the delivery could take up to a year	If the seller is someone you’re familiar with, the car can be delivered on the spot However, if the seller is a total stranger, the delivery will take at least several months because of the test driving, car inspection, and change of registration You will need to personally complete the procedure for change of registration at a Licensing Office

What’s the safest way to buy a new car/used car?

To buy a new car, you can go to any authorized car dealership. Car manufacturers such as Porsche, Volkswagen, and Audi have general distributors in Hong Kong. The Automall also acts as distributor for American and Japanese brands. Many car dealers also have websites where you can check the models and prices of the cars they carry at any time.

To buy a used car of good value for money, naturally, you have to shop around. You may go to used car dealerships, such as DCH Pre-Owned Cars’ showroom in Kowloon Bay. Some dealerships, such as BMW, also sell used cars. However, these dealerships typically have only a small number of used cars in their showroom available for selection. So, if you wish to have a test drive, it's best to contact them first to make an appointment.

These days, you can also find the right used car online. Used car websites such as 28car.com and Car1.hk have search features that allow you to filter vehicles for sale based on the make and type of the vehicle. Some of those who sell used cars on these websites are car dealers, while others are the owners themselves. Other than that, you can also try your luck on online communities such as Asiaxpat or Craigslist.

Should I buy a petrol-powered, electric, or hybrid vehicle?

Vehicle type	Benefits	Drawbacks
Petrol-powered	Car prices, and maintenance and repair costs are cheaper than for electric cars It’s easy to find gas stations	Not eligible for the “One-for-One” tax incentive Exhaust pollutes the environment Gasoline is extremely flammable and highly volatile, and thus more dangerous in an accident
Electric	Zero exhaust, and thus more environmentally friendly Not affected by rising oil prices Eligible for the “One-for-One” tax incentive	More expensive than traditional petrol-powered vehicles Charging stations are still not widely available Can only be serviced and repaired by the original factory, and repair and insurance costs are very high
Hybrid	The battery is charged by the engine, so there is no need to go to the charging station	Engine power is only average If you drive long distances, the energy saving performance is actually worse than with electric vehicles

Steps for buying a new car/used car

Steps	New car	Used car
Step 1. Choose your car	Choose your car at the showroom	Arrange a car inspection through a friend, on an online platform, or via a used car dealer Note the year of production, the number of previous owners, the mileage, the expiration date of the current vehicle license, etc. Usually, the newer the car, the higher its value
Step 2. Test drive	During the test drive, your major concerns are whether you like the car and its performance	Look out for unacceptable blemishes Test the basic operations, such as the brake system, power window switches, turn signal lights, and see whether the steering wheel is working normally During the test drive, pay attention to whether there is unreasonable noise What to look for when taking a test drive
Step 3. Car inspection	No vehicle inspection is necessary	After negotiating a price with the seller, you can contact a car inspector to come to the used car dealer to inspect the car You can also ask the seller to go to the garage to inspect the car with you to ensure that the car has never been involved in a serious collision Do not make any major payments before the car inspection, but you can pay a small amount of money as earnest money (e.g. HKD $1,000) Provided the vehicle is in good condition, the inspection can typically be completed within half a day Vehicle examination in Hong Kong: Requirements and Procedures
Step 4: Sign a contract	If you are satisfied with the test drive, you can make a deposit	Sign a provisional purchase contract with the seller The contract should specify (1) the vehicle is not used as security for any loans (2) the vehicle is not the subject of any outstanding car loan
Step 5: Secure car insurance	After selecting an insurer, you can ask the car dealer for the chassis number of the car (usually it is on the sales contract), and then give it to your insurance broker Your insurance broker will issue a temporary cover (cover note) to you, which you can produce to the car dealer for completing procedures such as vehicle licensing	Ask the seller for a copy of the vehicle license for securing auto insurance Secure temporary cover and take it with you on the day of the transfer of registration
Step 6: Transfer of registration	No transfer is required	The buyer and the seller sign a vehicle ownership transfer notice and complete the formalities at the license office How to transfer the ownership of a car in Hong Kong?
Step 7: Closing	Make sure the car dealer brings all the documents, including the original Vehicle Registration Document (if there is a car loan, there will only be a copy of the Vehicle Registration Document) Make sure there are no major problems with the vehicle, such as big scratches, or unreasonable mileage If there are serious problems, the buyer has the right to refuse If there is no problem, the balance can be paid	Pay the balance after the transfer of registration

Points to note when buying a new/used car

Tips for buying a new car

If you have already decided on a model, remember to do the following three things before making a deposit:

1. Perform a car inspection

It is best to specify in the contract that the vehicle license is to be issued only after the car is inspected, and the car can be inspected again after delivery.

2. Bring the needed documents

To buy a car, you must have your HKID card, driving license, proof of address, and documents for third-party liability insurance

3. It’s your right to refuse to take delivery of the car after the inspection

As mentioned above, if you discover a problem during the inspection at delivery, you have the right to refuse to take delivery, and demand that the dealer solve the problem before finally taking delivery of the car.

Things to pay attention to when buying a used car

1. There are a few very important numbers to take note of when selecting a used car

When choosing a used car, pay attention to the year the car was manufactured (i.e. the vehicle’s age), the number of previous owners (i.e. the number of times it has changed hands), its mileage, the expiration date of the vehicle license, and whether the car needs to be repaired, etc. Usually, the lower the numbers, the higher the vehicle’s value.

Here we’d like to make a clarification: in Hong Kong, a brand new car is called a “0-hand car”, and a vehicle with one previous owner is called a “first-hand car”, and so on. As for mileage, in Hong Kong, on average, a private vehicle is driven about 10,000 - 15,000 km a year. You should generally try to buy a used vehicle that was first sold by an authorized dealer, especially one with factory maintenance records. If necessary, you may call the authorized dealer for the odometer readings. If you are considering a parallel-import vehicle, make sure you know whether a vehicle license has been issued for it. If there are no import documents or detailed information on a vehicle, we recommend that you do not consider it.

Request a "Certificate of Particulars of Motor Vehicle"

The "Certificate of Particulars of Motor Vehicle" is a record of whether the vehicle has been involved in an accident or insured event. This information is extremely useful to prospective buyers, as it will prevent you from buying a used car with outstanding penalty tickets. For more information, please contact the Licensing Office of the Transport Department.

2. Have the car inspected before making a deposit

It is essential that the car be inspected before you make a deposit. The car inspection service provided by the Hong Kong Automobile Association can ensure that the vehicle is in good shape so that you don't end up paying for the damage caused by others. On the other hand, if there is a garage you know well, it will be an even simpler matter to ask the mechanic to have the car inspected, including its underside.

3. Note the times of rapid depreciation

There are two times of rapid depreciation:

During the first year of a car’s life, there will be "Niagara Falls" depreciation, which will gradually slow down over the next 3 to 6 years.

Starting in the 6th year, the Transport Department will require mandatory annual vehicle inspections, so the depreciation rate of vehicles over 6 years old will be relatively higher.

4. Test-drive the car

Depending on where you bought your car (whether from a dealership, auction or in a used-car transaction), it’s imperative to do a test drive. This is the only way you can get a first-hand feel for the vehicle's performance, interior space, and whether everything is working properly. In addition, you can also feel how the car performs in gear shifts and when you step on the brake pedal, and whether all four wheels are properly aligned.

Top 5 private cars for P-license drivers (personal recommendations)

1. Honda Jazz

2. Toyota Sienta

3. Honda Freed

4. Mazda 3

5. BMW 3 Series

The maintenance costs of these five models are reasonable. The Japanese models are smaller in size, which makes them more suited to the narrow roads in Hong Kong, and easier for new drivers to handle. As for the prices, these models depreciate relatively slowly, so they are very suitable for new drivers to improve their skills with. Finally, these models are very commonplace in Hong Kong, making them easy to resell and repair.

How much does it cost to own a car in Hong Kong?

Full article: [Saving Tips for Car Owners] 2021 Guide to running a car in Hong Kong

Down payment - it is a larger sum in Hong Kong than in many other countries. The down payment for an upmarket used European car can be as high as HKD $150,000, and that for even an imported Japanese car starts from HKD $80,000. The down payment depends on the make and model of the vehicle.
License fee - it is paid every four months or every year. The license fee for a private vehicle depends on whether it runs on gasoline or light diesel, and its engine displacement. The larger the engine displacement, the higher the fee, and vice versa. The license fee for electric vehicles is determined based on the net weight of the vehicle.
Car park rent - the South China Morning Post reported in 2019 that the most expensive parking space in the world was in Hong Kong, and was sold for HKD $7.75 million. Car insurers often require that car owners park their vehicles in a safe parking spot, so you must ensure that your parking arrangements meet the requirements of your insurer.
Fuel cost - Hong Kong's oil prices are the highest in the world. And with the energy price spike due to the Russia-Ukraine war, don’t expect oil prices to come down anytime soon.
Insurance premiums - P-license drivers like to buy used cars. And because used car prices are relatively low, these drivers are naturally inclined to secure third-party liability insurance, which costs less, rather than comprehensive auto insurance.

Contact Kwiksure to get motor insurance quotes

Kwiksure has over 20 years of experience in the car insurance industry, comparing quotes from over 60 insurers in Hong Kong. Use our online quotation tool now to get a free car insurance quote!

The above information is for reference only. Kwiksure takes no responsibility for the accuracy and timeliness of the information. For the coverage, mode of compensation, benefit limit and premium levels of any specific insurance plan, please refer to the relevant policy terms.

Author Kwiksure Team

Kwiksure is a licensed motor insurance brokerage company with over 20 years of experience in insurance. The company strives to simplify insurance and select the best insurance plans for customers that fit their budget and coverage needs.

Kwiksure provides a range of insurance products, including car insurance, motorcycle insurance, cross-border insurance between Hong Kong and Mainland China, home insurance, travel insurance, domestic helper insurance, and voluntary medical insurance. The team has been named "Best Car Insurance Broker" and "Outstanding Leadership Award" by various media outlets over the years.

Author: Kwiksure Team

Created On: 2021-03-03