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If you’re looking to buy a vehicle in Canada, one major question almost always comes up. Is it better to purchase a new car or a used car? After all, there are plenty of benefits and drawbacks to either option, both in the financial and the mechanical sense. So, as you can imagine, it’s an important question to consider before you make your choice.
Although it may be a simple choice for some drivers, there are many different factors to consider before you buy a new or used car, including but not limited to:
Of course, one of the first things you should think about is how much your new or used car will cost you, immediately and in its later years. For instance, while new cars usually have higher price tags, you typically won’t have to deal with as many maintenance issues and repairs as used models, at least not right away.
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Then again, a new car can severely drain your finances, especially if you make a down payment or have a long financing plan. Since most people cannot afford to buy a new car outright, a used one can be much easier to finance. Plus, if you find a cheaper model, the maintenance and repairs may not be too expensive. You can even shop around for private sellers to save on interest and dealership fees.
That brings us to our next factor, what to consider when shopping for a new or used car. Searching for a new vehicle can take a lot of time and effort because you may have to visit several dealerships to find the right one. Not to mention, car financing can be difficult to get approved for if you have bad credit, low income, or debt problems.
On the other hand, buying a used car can be just as inconvenient because it’s harder to tell how it’s been driven by its previous owner(s). In this case, getting a professional inspection done and checking the vehicle’s history is very important, so you can make sure there have been no accidents or subpar maintenance/repairs done.
Generally, newer cars come with better features and the latest in driver technology. With the inclusion of these commodities, the car will likely be safer and more reliable than a lot of used models too. Plus, a newer vehicle can mean that the manufacturer has had extra time to improve their models and iron out any factory defects.
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Unfortunately, a used car may not be as safe or reliable, depending on its age, mileage and previous driver’s habits. Nonetheless, there are plenty of cases where older models far outweigh their newer counterparts because they were built with sturdier materials and higher quality craftsmanship, which some manufacturers don’t produce anymore.
Another downside to used cars is that there are fewer guarantees. Even some older models from large dealerships will not come with a warranty if the car is beyond a specific age or mileage. However, when you shop for a new car, your dealer will probably offer you several types of warranties with different terms and conditions, that can cover or reduce the cost of all sorts of mechanical and electrical issues.
That said, a warranty can significantly increase the price of your car and may not be worth it, especially for vehicles with low or no mileage on them. For example, if your warranty only covers maintenance for a couple of years or up to a certain mileage. After all, most warranties don’t include wear and tear or incidents that were your fault.
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As mentioned, when it comes to new and used cars, one of the primary factors that every driver should think about is the overall cost. Not just the initial price tag but all the other expenses that come before and afterward too, such as:
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New | Used | |
Price | Higher initial price | Lower initial price |
Features | Can choose any make, model, trim, colour, etc. | Selection is limited to what you can find online, etc. |
Depreciation | Faster loss in resale value | Slower loss of resale value |
Financing | Usually possible. Approval, rates and terms vary based on your income, credit, etc. | Sometimes possible with dealerships. Easier restrictions may apply |
Warranty | More types, longer terms, better coverage, etc. | Less possible for older models with more mileage |
Insurance | Higher rates/premiums | Lower rates/premiums |
Repairs & Maintenance | Typically not needed for a long time. Some issues are covered by your warranty | Often necessary and more immediate. May not be covered by any warranty |
As you can see, there are plenty of factors to think about prior to buying any new or used vehicle. Don’t get discouraged. Once you get the hang of the process, finding the right car is straightforward enough. Here’s what you should do you make your decision:
In the end, buying a new or used car should depend mainly on your current and future financial situation. For instance, if you have a good income and credit score, a new car can be a great investment. Then again, a used car might be more affordable overall. Either way, it’s best to research and avoid making any quick decisions.
Need help finding the right financing for a new or used car? Loans Canada can connect you with the best lender in your area.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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