But that doesn't necessarily mean that buying used is best for you. Here we look at the pro and cons of the two options. Plus, we consider the third way — buying nearly new. The big advantages of new cars are threefold. First, you get to choose the exact specification you want. Second, you have the protection of a full manufacturer warranty should something go wrong. And third, there's no unknown history to worry about.
These aren't the only benefits of buying new, either. Newer cars will have more advanced technology, and the value of this should not be underestimated — particularly in the areas of fuel efficiency where huge advances have been made comparatively recently and safety.
On the downside, it's also true that most breakdowns in modern cars stem from electrical faults, many of which are not easily cured at the side of the road.
Around eight million used cars sold are sold in a typical year. And this enormous breadth of choice is probably the single best argument for buying a used car. Few new cars are worth more than half their purchase price after three years, while many will have lost up to two-thirds of their value. The introduction of ever-longer factory warranties has also added to the appeal of used cars — boosting peace of mind for those buying previously owned vehicles.
For example, normal wear and tear will have you buying new tires or brake pads, which may not be covered by a warranty. Depending on the mileage, a used car could require costly maintenance or repairs.
The initial steps in buying a used or new car are similar. You set a budget, identify potential makes and models within your price range and do some pricing research. If you want something specific, like a certain color or features, it might take a while to find the right car. This might not matter to you if you plan to own the car for a long time. If you go this route, you might pay less for the car — and might save on auto insurance , too.
Lower-priced cars are typically less expensive to insure. While the older model will likely cost less, interest rates on used car loans are typically higher than loans for new cars. Experian State of the Automotive Finance Market report shows that in the second quarter of the average interest rate for new-car loans was 5.
Without a hefty car down payment , getting approved for a loan that covers the generally higher cost of a new car can be difficult, especially if you have lower credit scores. There are pros and cons to buying both new and used cars, and what you decide on may come down to your personal preferences and financial situation.
Getting preapproved for loans from a few lenders can also help you get a few estimates and compare your options, too. Lest you think this is some anomaly peculiar to BMW or to luxury cars in general, be assured that it is not. Depreciation, like the common cold and blatant disregard for stop signs, is everywhere. Because of that, you can find similar potential savings across the automotive market. Not ready for the 3-series yet?
A Honda Civic is a great entry-level car, and the same theory of the one-year-old, same-generation model works in its case, too. These two examples point out that the biggest savings typically come on more expensive vehicles. New advancements in engineering means that new cars are always made a bit stronger and a bit safer in the event you are in a crash.
While this fear is exaggerated, and the cars on the market are made more reliable than they were a decade or two ago, this does generally hold true: new cars are more reliable than used cars. There are two reasons for this: first, engineering continues to evolve and improve so vehicles will not have nearly the same amount of breakdowns or shorter life spans. Second, the biggest issue for reliability is how old the vehicle is, and the older a car is the less reliable it will be.
One of the big problems for used cars is the lack of choice and selection. It can be a lot of work to search online or visit different used car dealers until you find a vehicle that fits what you want in terms of the make, model, trim, colour, age, kilometres, condition, price, and so on. In the end, you will be at the mercy of what used cars are on the market in your area and in your budget.
Meanwhile, for new vehicles you can visit one dealer that has the make and model you want and they will have tons of options to choose from on their lot. In the end, whether it is better to buy a new or a used car really depends on your situation. If you have the money, buying a new car offers you much greater value in terms of financing, fuel economy, performance, safety, reliability and the amount of selection and choice you have.
How to Buy a New Car in Ontario? How to Buy a Used Car in Ontario? How to Buy a Car in Ontario as an Immigrant? How to Test Drive a Car? How to Lease or Finance a Car in Ontario?
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