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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 Min. Loan Amount Interest Rate Loan Term Min. Credit Score Requirements
CarsFast Car Loans
4.90% to 29.90%
12-96 months
Min. income of $1,800 /month, 3+ months employed
Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs. Apply online to purchase a new or used vehicle and get the vehicle delivered to your door.
Loans Canada Car Loans
0% to 29.99%
3-96 months
Min. income of $1,800 /month, 3+ months employed
Get access to financing from multiple lenders across Canada through a single application with Loans Canada. Bad credit, CERB and EI borrowers are considered.
Car Loans Canada
3.99% to 29.95%
12-84 months
Min. income of $2,000 /month, 3+ months employed
Search thousands of vehicles online, including $0 down options, from dealers across the country and get matched with affordable financing options. Auto loans are also available to those with bad credit, consumer proposals and bankruptcies to help rebuild credit.
Coast Capital Car Loan
18-84 months
Able to service debt payment of $300/month
Finance or lease both new and used vehicles with competitive rates and flexible terms from one of Canada's largest credit unions. No credit union membership required for this product.
Canadian Auto News
3.99% to 29.95%
12-84 months
Min. income of $2,000 /month, 3+ months employed
Answer a few simple questions to get matched with affordable financing options. Auto loans are also available to those with bad credit, consumer proposals and bankruptcies to help rebuild credit.
LoanConnect Car Loans
9.90% to 46.96%
3-120 months
No min. income requirement
Get access to 25+ lenders through LoanConnect's brokerage. Receive pre-approval in as fast as 60 seconds and get your funds in as little as 24 hours.
Canada Auto Finance
3-96 months
Min. income of $1,500 /month, 3+ months employed
Canada Auto Finance is a broker that connects borrowers with 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
1.90% to 19.99%
Up to 72 months
Min. income of $1,600 /month, 3+ months employed
Get connected with suitable lenders through CarLoans411. Finance your next car, van or truck with loans available in amounts from $500 to $50,000. Check eligibility for this loan through LoanConnect.
Fairstone Secured Personal Loan
19.99% to 23.99%
36-120 months
Established credit history and own your home
Fairstone offers secured personal loans up to $50,000.

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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