Shopping for a car in Canada should start with your budget and the type of vehicle you need. The amount of money you can afford to spend influences the purchase price. How much will your monthly payments be? Are you looking for something to get to and from work? A family vehicle such as a SUV or minivan? Perhaps you are in the market for a sporty car that has plenty of power.
No matter what you are after, the decision to purchase a new or used vehicle will come up. There are pros and cons to each of them. There is no right or wrong answer, you must assess your situation and see what is the best fit for you. Here are some things to consider to help you make that choice.
Pros of a New Vehicle
It is exciting to own a vehicle no one else has before! It is clean inside and out. It has extremely low miles, often in the single digits! It doesn’t have any dents or stains. You can feel confident that it has been cared for. With routine maintenance and driving correctly, this can be an investment that works out well for you. The vehicle can still be in great condition after you pay it off.
With a new vehicle, you are bound to have a warranty on it. Should there be a major problem with the engine, drive train, or transmission, it is going to be covered under the warranty in most instances. When it is a used vehicle, you may have a huge out of pocket expense to get that vehicle operational again. The warranty coverage timeframe, mileage, and what is included vary so always review this information prior to buying a new vehicle.
The resell value of a new vehicle is high, especially if you take care of the vehicle. When it is clean inside and out as well as low mileage, you can get a great price for it. If you decide to sell it privately or trade it in down the road, you want the best value you can get. The average cost of a new vehicle in Canada is $61,000!
Cons of a New Vehicle
Since 2021, the cost of a new vehicle has continued to increase in Canada. It is approximately $16,000 more to buy a new car just a few years later. Another downside to think about is the payment. With a new vehicle, the payment is typically more than with a used vehicle. You also must evaluate the amount of interest you will pay. That is based on your interest rate and the amount you finance.
When you finance a new vehicle, you are legally obligated to maintain certain insurance coverage on it. This is mandated by the finance company to safeguard their investment with you. Should the vehicle be damaged or destroyed, the insurance coverage must be sufficient to cover the remaining balance due on the loan you took out for the purchase of the vehicle.
Pros of a Used Vehicle
There is plenty of value with a used vehicle purchase too. This can be ideal for someone with lower income or without much established credit history. It can be a stepping stone purchase. The used vehicle can be traded in later for a new vehicle or resold for a profit. This can be a viable way to keep the payment low or not have a payment at all. You may have enough to buy it outright, and the vehicle is yours. If you do finance it, the payment should be much lower than that of a new vehicle.
A used vehicle can have plenty of life left in it. Make sure you evaluate the vehicle and have it fully inspected by a licensed repairs shop. Sometimes, a used vehicle is sold with a limited warranty. Make sure you read that information so you understand what is covered and for how long. Many used cars are sold “as is” so the buyer should take action to ensure the vehicle is in good operational condition before they pay for it.
Cons of a Used Vehicle
There are some downsides to buying a used vehicle. You don’t have any guarantees on how long it will last after you purchase it. Do you have a backup plan if the vehicle needs emergency repairs? The vehicle may have some cosmetic damage inside and out due to wear and tear or a previous accident. Such blemishes don’t affect how the vehicle operates though so it can be a great deal overall.
You don’t know how someone took care of a used vehicle. Did they drive it properly? Did they change the oil regularly? You don’t know why they decided to get rid of the vehicle either. Did they need something larger or was there something wrong with it? A used vehicle can be a great purchase but you should do some additional investigating before you go this route to ensure you get a reliable vehicle.