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Should I Buy A New Or A Used Car?

07/25/2019 @ 5:09 am

Everybody who once bought a car, or who’s thinking about buying another one, has had to wrestle with that age-old automobile owner dilemma: Should I splash out on a new car, or would it be better to stick to a used model? This one question has been debated back and forth for years and years, and the fact that we have yet to arrive at a single consensus which proves satisfactory for all parties involved proves that it’s not going to be resolved any time soon.

We’ll be honest—there are a lot of factors involved that are going to decide whether or not the best car for you is a used car or a brand-new model, fresh that year. Some of them are serious, like the finances involved of the safety features, while others are less serious and have more to do with wanting the freshest make just because it’s so much cooler (don’t worry, we’re prone to this too and won’t think any less of you if that’s a major priority for you). So where is the prospective vehicle owner to start?

Research Can Be Daunting

Somebody looking at a pinboard full of research.

Scouring the internet is a thankless task, because there have been arguments put forward for both sides that are excellently articulated and convincing. Indeed, it’s so difficult to pick between them sometimes that your own opinion can change as a result of nothing more involved than merely reading one article and then another.

The truth is that nobody is going to be able to answer this question for you better than you’ll be able to answer it for yourself. After all, you’re the only person with the precise catalogue of what you need out of an automobile for your life. You’re the only person who knows exactly which percentage of your desire comes from need, and which proportion belongs to want. How could anybody do this for you?

To that end, we here at OshawaBadCreditCarLoans.ca had an idea. Rather than try to dogmatically force you to pick one side or the other, we figured the best way to go about helping you solve this enduring, difficult question is by presenting a few benefits of each option, and a few downsides of each.

While such a list is obviously not going to be a comprehensive account of which side you should eventually take, it will definitely give you a solid overview of some of the main points of consideration for each option, and will hopefully also equip you with enough background info to do some further, more specific research, for yourself.

We’ve all been intimidated by the amount of information out there, which is why we’re going to keep it short, sweet, simple, and to the point.

Without further ado, here’s our solution to the problem of helping you decide whether to buy a new car or a used car.

Benefits Of Buying A New Car

Somebody behind the wheel of a new car.

1: Reliable Functionality

While it’s never a given that any car is going to last you a set period of time, the way these machines weather is more complicated than the figures that are represented on the odometer. Often the only figure you’ll get about a used car is how many miles it has driven, as if that’s supposed to be a perfect account of the wear and tear it’s suffered throughout the course of its life.

One of the major reasons to consider buying a new car is that you know for a fact that it hasn’t been through too much. It hasn’t been through anything, to be more precise. You can trust the tyres, the engine, the suspension and the brakes just as much as you can trust the windshields, the upholstery, the circuitry, and all those other factors that aren’t adequately accounted for by how many miles a car has under its belt.

2: Resale Value

Every car depreciates as soon as you buy it, that’s just the way the game is played. Indeed, they lose value at a much faster clip than just about anything else you’re likely to need a financing scheme in order to purchase. That being said, there’s a marked difference in the resale value of a new car and that of a used car. Resale prices can be calculated using a number of online tools, like this one, but a few key points remain the same.

One is that some brands retain better value than others (Honda and Toyota are the two best out there, owing to the reliably excellent Japanese engineering). The other is that new cars will always retain more value than used cars over the same period of time. You’ll have to part ways with your vehicle at some point or other, so why not give yourself a great deal on driving a new car for that many years?

3: Interest And Insurance Rates

Interest rates are one of the two main ways your credit score can affect the loan deal you’ll be able to secure for yourself (the other being whether the loan is shorter- or longer-term). In carrying out your research for buying yourself an automobile, you’ve doubtless come across some sample figures of interest rates offered to the various categories of buyer. These are, without question, more favourable for new cars than for used cars.

This is largely because of point 1. New cars are significantly more reliable, even from the most cursory overhead perspective. Given that the interest rate is money you’re paying to offset the financial risk incurred by your lender, it doesn’t go towards the value of the machine at all. With that in mind, the lower the interest rate, the better; and new cars will always have more appealing interest rates than used cars.

To be completely honest, the difference between the rates you’ll get on your insurance deal between new cars and used cars isn’t nearly as significant as the difference between interest rates. In some cases, it might be a number as low as $20 per month separating the two. With that being said, however, they are always lower, even if just by a fraction of the overall price, and so the logic is much the same as the logic you’d employ in considering the interest rate discrepancies between new and used cars. Why pay more when you could pay less?

Benefits Of Buying A Used Car

1: Lower Price

Even though the resale value of new cars is often a little better than that of used cars, there are undoubted financial reasons to consider buying a used car. For one thing, the price on the tag is always a lot less, which will translate into a lower overall value of the loan you’ll need to commit to in order to pay it.

Used cars are just cheaper—that’s the way it is, and that’s the way it’ll always be. Another thing to consider is that while new cars do have better resale value, used cars depreciate less. This is because they’ve already depreciated, and the diminishing returns effect of value depreciation comes into play. Although this is more of a technical point than a practical one, it’s still worth bearing in mind.

2: Fewer Features

One of the most common tactics employed by car salesmen to drive up their commission fees is offering an endless list of extra features. They plan to overwhelm you with the sheer volume of choices so that you become disoriented and wind up paying for something you don’t need, and may not even particularly want.

With used cars, though, that isn’t so much of a problem: for one thing because they’ve already been bought with a certain amount of features included (back when the used car was itself a new car); for another because technology will have advanced since they were manufactured and as such there are going to be extras which simply aren’t compatible with the model as it currently exist. You’ll save a lot of money on the features list with used cars, because anything you really do need you’ll be able to buy from a third-party manufacturer after, which will never—ever—turn out to be as expensive as it would if you bought it directly from the dealership.

3: Reliable Mechanics

In contrast to point 1 on the new car benefits list above, while used cars will undoubtedly have suffered some wear and tear, they’ve also proven that they can handle driving long distances. Cars nowadays are built to last for at least 100,000 miles before encountering any serious faults, so if you’re able to snag yourself a used car that has driven anywhere under that figure and is still pretty much ‘scratch-free,’ you can expect to walk away with a machine that is proven to be reliable and on which you can count in more or less any mechanically challenging situation.

To add to this point, many car makers offer terrific long-term car warranties, plenty of which can be extended by triggering a clause in the original contract. This means that you don’t need to necessarily sacrifice customer service and support by simply opting for a car that isn’t fresh off of the assembly line. Moreover, if you buy the used car at its own name-brand dealership (for example, buying a used Renault at a Renault dealership), you can rest easy in the knowledge that the dealers will have already inspected every single model they have on display in their lot. It’s not in their interest to sell their own used models if those same models will break down and trigger a loss of customer faith in the brand.

In fact, it’s almost more important to them than it is to you that their cars function reliably and perform as they’re supposed to. For that reason, used cars can be considered to be surprisingly good value, despite the fact that they’ve already been broken in and don’t offer anywhere near the same resale value.

By Way Of Summary

A carpark tower.

So there it is. Three major upsides to buying a new vehicle, which we’ve contrasted to three major upsides to buying a used car. These are by no means the only upsides to each option, but we do feel that they’re strong enough to be considered a good estimation of why you might opt for either choice in the end.

If nothing else, we hope that maybe in the course of reading this article you learned something about the difficult (but fun!) decision you’re about to make which will stand to you when it comes to signing that infamous dotted line.

As a final point, if you’ve been struggling to secure an automobile loan in Oshawa because your credit score isn’t quite as healthy as you’d like it to be, consider giving us here at OshawaBadCreditCarLoans.ca a call. We consider every application we receive, irrespective of the credit score that comes with it, and we’d love to talk about how we can assist you in your particular situation.

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