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Should I buy a used luxury car?

Weigh the benefits and drawbacks to decide if buying a used luxury car right for you.

Picture yourself behind the wheel of a BMW or Lexus? Buying new and leasing are two options, but both can leave your budget stretched to the max. Instead, you might want to consider a used luxury car to mesh your finances with your style.

6 reasons to buy a used luxury car

If you want the brand name but don’t want to shell out tens of thousands of dollars, you may want to buy a used luxury car. Here are a few reasons why it pays to buy used versus new:

1. Lower upfront costs

A new midsize luxury car will run you anywhere from $50,000 to $60,000. If you want a better trim or other features, that price starts to grow.

A used luxury car may only cost $20,000 to $30,000. And some lower-tier trims or older models have a price tag of under $20,000. This means your down payment will be much smaller, and your monthly payments won’t eat up a huge portion of your budget.

2. Depreciation in your favor

All new cars depreciate the most in their first year, and luxury cars suffer a pretty big drop in value too. Deprecation in the first year alone can reduce the car’s value by up to 30%. Buying a used luxury car means you’ll bypass that initial drop in value, and be less at risk of having an upside down car loan – where you owe more on your car loan than what the vehicle’s worth.

While there are some luxury brands that maintain good resale value, you’ll find there are plenty that can be had for bargain prices. So instead of spending $60,000 on a new car, you can spend half that on a 3- or 4-year-old model. You’ll get many of the same features without losing as much money on a depreciating asset.

3. Annual overstock

Each year, people turn in their previous leases. And each year, the inventory of used luxury cars goes up. This annual overstock means you can find a variety of relatively new luxury models for cheap. If you’re willing to negotiate, you may be able to talk your way into a rock-bottom price for a lightly used car.

4. Less mileage

Since new luxury cars are more likely to be leased, you’ll find that used models don’t have many kilometres. In addition, free or discount maintenance programs offered by manufacturers results in a well-maintained used car. This means your recently used car should be almost as good as if you’d bought it new.

Of course, if you buy an older used luxury car, mileage and maintenance are as variable as any other used car.

5. High-tech and high-end features

You aren’t guaranteed to find a fully tricked-out luxury trim at a low price. But you’re more likely to find up-to-date technology and high-end features when buying a used luxury car. It may not be brand new, but it will still provide a classy driving experience with some technology that may still not have reached new non-luxury models yet.

6. Renewed warranty

If you opt for a certified preowned car from a luxury manufacturer, you’ll often receive a renewed warranty. In fact, many manufacturers allow secondary owners to drive out the original manufacturer’s warranty before taking advantage of a short preowned warranty. So while maintenance costs can be high on luxury cars, you can at least rest assured your car is still covered for manufacturer defects.

Tips for buying a used luxury car

Convinced buying a used luxury car is for you? Here are 4 tips to help you pick the right one:

  • Schedule an inspection. Just like buying any used car, you should have a trusted mechanic check it out. An inspection can turn up any potential faults or previous damage that may not be initially visible to you.
  • Run a full diagnostic scan. Alongside your inspection, have a diagnostic scan done on the onboard electronics. These control a variety of features, so even a small problem can impact how well your car drives.
  • Check the controls. Chances are you’re buying a car with an infotainment system and a central command system. Connect your smartphone, turn on the Wi-Fi, press all the buttons and make sure everything works the way it should.
  • Avoid modifications. If you’re going for an older luxury car, check for previous owner modifications. Any big changes should be noted, and in general, avoided. You don’t want someone’s faulty upgrades to cost you money down the road.

Why should I avoid buying a used luxury car?

Although buying a used luxury car can be a great deal, it may turn out to be pricier in the long run. Consider these drawbacks of buying a used versus new luxury car before you decide what’s right for you:

  • More expensive to maintain. Specialty mechanics and luxury car parts are more expensive overall. Insurance and premium gas also add to your costs.
  • Less fuel efficient. Luxury cars tend to have powerful engines, which means they’re less fuel efficient than other cars — even when new. And the older they get, the less fuel efficient they’ll be.
  • Service done by manufacturer. Unlike economy cars, a luxury car typically needs to be serviced and repaired by a certified — and much more expensive — mechanic.
  • Lacks all the bells and whistles. Just because it’s luxury doesn’t mean it has everything. Make sure your car comes equipped with all the technology and features you want before you buy.
  • Out-of-date technology. The older your car is, the more likely its technology will be outdated. Even the best luxury brands may not work with your new smartphone if the computer system hasn’t been updated.

Compare car loan options

Name Product Loan Amount Interest Rate Loan Term Min. Credit Score Requirements Table description
CarsFast Car Loans
$500 - $75,000
4.90% - 29.90%
12 - 96 months
Min. income of $2,000 /month, 3+ months employed
Get a new or used vehicle delivered to your door.
Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs.
Loans Canada Car Loans
$500 - $35,000
0% - 29.99%
3 - 96 months
Min. income of $1,800 /month, 3+ months employed
Compare rates from multiple lenders.
Complete a single application to get quotes from different lenders. Bad credit, CERB and EI borrowers considered.
$7,500 - $85,000
3.99% - 29.99%
12 - 96 months
Min. income of $1,800 /month, 1+ months employed
Available in Ontario only.
Apply online and get your new vehicle delivered to your door anywhere in Ontario free of charge. All credit scores considered.
Coast Capital Car Loan
$10,000 - No Max.
18 - 84 months
Able to service debt payment of $300/month
Competitive rates and flexible terms.
Finance new and used vehicles from one of Canada's largest credit unions. No credit union membership required. Available across Canada except SK, QC, NT, NU, YT.
Splash Auto Finance
$10,000 - $50,000
9.90% - 29.90%
24 - 84 months
Min. income of $2,200 /month, 3+ months employed
Apply with any credit score.
Get financing for a new or used car. Auto loans for borrowers with fair credit, bad credit, no credit or bankruptcy.
goPeer Car Loan
$1,000 - $25,000
8.00% - 31.00%
36 - 60 months
Min. income of $40,000 /year
P2P platform with competitive rates.
Canada's first regulated consumer peer-to-peer lending platform that connects creditworthy Canadians looking for a loan with Canadians looking to invest.
Carloans411 Car Loans
$500 - $50,000
1.90% - 19.99%
Up to 72 months
Min. income of $1,600 /month, 3+ months employed
High application approval rate.
Get connected with suitable lenders to finance your next car, van or truck. Check eligibility for this loan through LoanConnect.
Canada Auto Finance
$500 - $45,000
4.90% - 29.95%
3 - 96 months
Min. income of $1,500 /month, 3+ months employed
Get financing from partnered local lenders.
Financing for a new or used car is available for borrowers with bad credit, no credit, CERB, EI or bankruptcy.
LoanConnect Car Loans
$500 - $50,000
9.90% - 46.96%
3 - 120 months
No min. income requirement
Pre-approval in as little as 60 seconds.
Get access to 25+ lenders through this brokerage. Get your funds in as little as 24 hours.

Compare up to 4 providers

Bottom line

Buying a used luxury car can get you the right middle ground between affordability and class. To get the best deal, compare car loans and read our guide to buying a used car so you’re prepared when you visit the dealership.

Frequently asked questions about buying used luxury cars

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