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New vs. used cars

Something old or something new? Make the right decision and drive away without regret.

If you are in the market for a new car, you’ll need to decide if you are going to go new or used. Both options have their benefits and drawbacks to consider, such as price, longevity and condition. When deciding between a new vs. used car, it is easy to assume that a used car will not be as good of a deal as a brand new one, but there are several factors that go into play that we will break down.

New vs. used cars in a nutshell

FeatureNew carUsed car
PriceGenerally costs more and depreciates immediatelyGenerally costs less and retains its value longer
Car optionsLots of options that you can customize to your needsYou’ll face a limited selection depending on your location
Financing optionsMore options with lower interest rates.Fewer options with higher interest rates and more stringent requirements.
Information availableManufacturer stickers, dealer documentation and up-to-date reports.Typically general information only, and private sales may not have any info at all.
WarrantyManufacturer and dealer warranties are availableVaries depending on the age and condition of the car
DepreciationVaries between manufacturers, but a brand new car could lose as much as 20-40% of its value in the first year.Used cars depreciate slower since they have already lost a significant portion of their value.
Interest ratesGenerally has lower interest rates.Generally has higher interest rates.
IncentivesMany manufacturers and dealerships offer incentives such as cash rebates and discounts at certain times of the year or snow tires for no charge.Manufacturers typically do not offer incentives on used vehicles, though used car lots are known to throw in incentives to persuade potential customers.
LeasingSimilar to paying outright, you will pay more to lease a new car.The car has already depreciated a fair bit, resulting in lower lease payments each month, but leasing a used car is not nearly as common as it is for new cars.
Insurance ratesInsurance rates factor in the price of the car and the age, so a new car is likely to cost more to insure than a used one.Insurance rates are generally lower on used cars, though this also depends on the make and model of the vehicle.
Performance and fuel efficiencyNew cars should be getting close to, if not exactly, their advertised fuel economy ratings.According to Auto Trader, used cars generally do not lose a significant amount of fuel economy over the years, though there are exceptions to that rule.
SafetyNew cars with the latest features and high safety ratings are a shopper’s best bet for the safest vehicle. Newer cars often come with braking assist and blind-spot monitoring as well.The U.S. National Highway Traffic Safety Administration says a higher percentage of passengers in older vehicles are killed when involved in crashes compared to new cars.
TechnologyNew cars will come with the latest technology available.Used cars will only be as up-to-date as the year they were built.
ReliabilityA new car is generally more reliable than a used car.Most used cars from the last few years can be sold to a second or third owner without issue.
Shopping experienceCars will only be available from a dealership with salespeople.
Be aware of expensive sales tactics and learn to avoid them.
Used cars could be bought from lots, online or through private sales.
Know what to look for in a used car and how to avoid a lemon.

Compare car loans

1 - 8 of 8
Name Product Loan Amount Interest Rate Loan Term Min. Credit Score Requirements
CarsFast Car Loans
$500 - $75,000
4.90% - 29.90%
12 - 96 months
300
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% - 31.99%
24 - 120 months
300
Min. income of $1,800 /month, 3+ months employed
Compare rates from 60+ lenders.
Complete a single application to get quotes from different lenders. Bad credit, CERB and EI borrowers considered. 0% APR for new cars only, used car rates start at 7.99%.
Coast Capital Car Loan
Varies
Varies
18 - 84 months
650
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.
goPeer Car Loans
$1,000 - $25,000
8.00% - 31.00%
36 - 60 months
600
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.
Clutch Car Loans
$7,500 - No max.
From 3.90%
12 - 96 months
580
3+ months employed, Max.1 bankruptcy
Pre-qualify for a loan in under 2 minutes with no impact to your credit score.
Get approved for financing in under 24 hours for the used car you want. No hidden fees. Get the vehicle delivered to your door.
Carloans411 Car Loans
$500 - $50,000
1.90% - 19.99%
Up to 72 months
300
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
300
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.
Splash Auto Finance
$5,000 - $50,000
9.90% - 31.00%
24 - 84 months
300
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.
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Compare up to 4 providers

Consider buying a new car if…

  • You want the latest technology in your car, such as Apple CarPlay or Android Auto
  • You are looking for the safest possible vehicle
  • You want to lease instead of buy outright
  • You want to pay lower interest during financing
  • You want to pick your own colour and features

Consider buying a used car if…

  • You want to keep initial costs down
  • You do not want to go through a dealership
  • You are fine with the car not being in perfect condition

Certified pre-owned cars

A certified pre-owned car is essentially a fancy term used by manufacturers so they do not have to say “used car.”

A CPO vehicle is sold by the manufacturer after undergoing inspections and maintenance to get it back into good condition before the keys change hands. The cars often come with a manufacturer’s warranty as well. Honda, Ford, Cadillac and Mazda are just a few of the car manufacturers that offer CPO vehicles. If you are having trouble deciding whether to buy a new or used car, CPO can offer the benefits of both – the peace of mind that comes with buying from a dealership with the reduced cost benefit of a used car.

What should I consider before buying a car?

When buying a car, you should consider what you are going to use it for. If you are just going to and from work or the grocery store, you probably do not need a pickup truck or SUV.

Finances are among the most important things to consider when buying a car. Larger cars are more expensive than small cars, and new cars are more expensive than used cars. When deciding whether to buy a new or used car, consider not only the price of the vehicle itself but also maintenance, insurance and gas prices.

How does depreciation impact my choice?

Depreciation can be the bane of a new car owner’s existence — but used car owners also need to account for it. Basically, depreciation occurs when your car loses value after you first purchase it. The act of changing hands between a dealership and a buyer or between two buyers will lead to your car being worth less, which means you could quickly become upside down on a loan.

How hard depreciation hits you depends on the car you buy. A new car typically loses 20% of its value the moment you drive it off the lot. For the average $30,000 car, this will decrease its value to just $24,000 if you sold it on the same day. And the longer you drive a car, the more it depreciates. Mileage, wear and tear and other mechanical issues could further decrease your new car’s value, making it that much harder to make back your money when you sell it.

Used cars also depreciate, but at a much slower rate. Because the majority of depreciation has already occurred, you may only see your car drop in value by a few thousand dollars before you sell it. This is why many people consider a used car to be a better deal. But just like with new cars, any mechanical issues or excessive mileage could quickly diminish your car’s value, which will make it more difficult to sell for a good price.

Frequently asked questions

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