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New cars vs. used cars

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

It’s the age-old question that every car buyer needs to decide: should I get a new or used car? A new car won’t have the same risk or wear and tear as one that’s been used, but it’ll cost you more.

New vs. used cars in a nutshell

New 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
What you need to knowKnow how to avoid expensive sales tacticsKnow what to look for in a used car and how to avoid a lemon
Financing optionsMore options with lower interest ratesFewer options with higher interest rates and more stringent requirements
Information availableManufacturer stickers, dealer documentation and up-to-date reportsTypically general information only, and private sales may have none; companies like CARFAX may be able to provide a vehicle history report, but these reports may have errors or be incomplete
WarrantyManufacturer and dealer warranties are availableVaries depending on the age and condition of a car; new car warranty may still be in effect or the manufacturer may have extended warranty options available

Compare your financing options for new and used cars

Name Product Loan Amount Interest Rate Loan Term Min. Credit Score Requirements Table description
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.
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.
$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.
CarsFast Car Loans
$500 - $75,000
4.90% - 29.90%
12 - 96 months
Min. income of $1,800 /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.
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.
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.
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.
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.

Compare up to 4 providers

What factors should I consider?

Financing options for new and used cars

There’s considerable overlap between used car loans and new car loans. Most lenders offer both to cover a wide range of consumers, but you’ll see a difference in the interest rates that are offered.

Financing a new car

It’s likely that if you have decent credit and are looking to buy a new car, you’ll be given a lower interest rate than someone looking to finance a used vehicle.

Since you’re still paying a premium price for a new car, you may need to borrow more. This means that whatever you’re saving on interest could be negated by the higher price tag on your new car. On the other hand, special offers on a new car may offset its higher price tag, and you may actually be getting a comparable or better deal than if you bought used.

Financing a used car

A used car may have a higher interest rate, but you’ll likely be paying less than you would for a new car. The downside? Some lenders only finance a used cars under a specific amount of miles or under a certain age.

Secured vs. unsecured loans

Secured loans can give you better interest rates because your using your car as collateral. This means if you default then your car can be repossessed by the bank.

If you aren’t interested in using your car as collateral, there are still other ways to finance your vehicle. You may want to consider an unsecured car loan.

Bottom line

Used cars are considerably cheaper, but you’re not getting the first-owner benefits that come with buying a new car. Take your personal financial situation into account, and be sure to take your time making this decision. After all, whichever you choose, it will likely be with you for at least a few years.

Frequently asked questions

Picture: Pixabay

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