Buying a car is a major financial commitment that will affect your wallet for the next several years if you are financing it with an auto loan. A key step in the process is deciding between buying a new or a used car. This is a decision that should be made before you begin to shop, so you'll need to weigh the pros and cons of buying new and used.
There are good reasons to buy a new car, but there are also good reasons to buy a used vehicle. There are downsides to both as well. When making this decision, it's best to examine your unique set of financial circumstances and what you need in a vehicle. Keep that in mind as you research the pros and cons of buying new and used.
The Pros and Cons of Buying New
Let's start with the good.
Pros of Buying New Shopping is easier: Buying a used car requires more leg work. You need to evaluate its condition and history, and you should have a mechanic inspect it. With a new vehicle, it hasn't had any previous owners. This gives shoppers some added peace of mind. Incentives: Sometimes, manufacturers offer incentives like cash rebates or discounted financing on new vehicles. This can knock down the price and even cover your down payment. Factory warranty: New cars come with manufacturer warranties. This can cover some maintenance costs for years to come. Many also include great amenities like roadside assistance or a rental car if your vehicle is in the shop. Latest features: New cars also offer the latest in design, safety, and technology features. You also have the ability to order one with the features and options you want.
However, there are some disadvantages.
Cons of Buying New Depreciation: Depreciation is the single largest expense of car ownership. New cars depreciate the second they are driven off the lot. They can lose over 20 per cent of their value in the first year. Also, a new car loses as much as 50 per cent of its value in three years time. This can greatly increase your chances of becoming "upside down" in the loan. Higher insurance premiums: New cars, because they're more expensive to replace, tend to have higher insurance premiums than older models.
It also should be noted that depreciation will have little effect on owners who plan to drive a car until the wheels come off, so to speak. But if you are the type that likes to change cars every couple of years, it's something you will need to consider.
The Pros and Cons of Buying Used
First, the advantages.
Pros of Buying Used Price tag: Used vehicles have already endured the steep initial drop in depreciation. Because of this, used vehicles are usually cheaper than similar new cars. Can still have warranty: If the car is only a year or two old, it's possible that it will come with a portion of the original limited warranty. You can get the same warranty coverage for a bit while also saving on the purchase price. Most manufacturers offer longer powertrain warranties as well, so that could still be in effect. Quality has never been better: A few decades ago, the consensus was that buying new was the safest course of action. These days, cars are of better quality than they ever have been. They are built to last for a long time, and studies have indicated that they do.
Now for the disadvantages.
Cons of Buying Used More leg work: Buying a used car requires more research and legwork. You should check its history, have it inspected and carefully examine every bit of it. Maintenance: It generally requires more time and money to maintain a used vehicle. All vehicles require general maintenance, but they also have parts and systems that wear down and need upkeep or replacement over time. Fewer features/choices: You can't "order" a used car with the features and options you want. You have to go out and find one with the features you want.
Deciding What's Best For You
Determining whether a new vehicle or a used car purchase will be best for you requires careful thought and research. The right answer is up to you, your vehicle needs, and financial situation.
But if your main concern is getting approved for auto financing, you should know that Canada Auto Loan can help. We match consumers with imperfect credit to a dealership in their area that can help them get approved. We've helped thousands of Canadians, and you could be next. Fill out our free and easy online application to get the process started today.