Are you thinking about buying a car? That’s a huge decision! Around 18.5% of the average Canadian household’s budget goes to transportation, including the costs of the vehicle and fuel expenses, making it a significant home expenditure. You have to be sure that you’re choosing the perfect vehicle that meets your requirements.
Shopping for a car is quite stressful, especially if you’re a young professional with a less-established credit score and lower savings in your bank account. Inflation, the global microchip shortage, production slowdown due to the pandemic, and the stressful economic scenarios make it even worse.
Is it better to splurge on a new expensive model or save money by purchasing a used car? What are the pros and cons of both these decisions? Consider these four questions to help you make the right choice.
1. How Much Can You Afford?
Your budget is one of the biggest factors that impact your decision. A new car has a higher sticker price. However, the dealer will offer various incentives like 0% auto financing and cash rebates if you can put down a sizable down payment. Even with these offers, keep in mind that you’ll have to commit to a monthly payment for a few years. Additionally, ensuring a brand-new car is expensive compared to the premium costs for a used vehicle.
However, used cars are significantly cheaper than brand new vehicles. Additionally, your out-of-the-pocket expenses are further reduced if you can score a used car loan. With that said, you have to budget for the inevitable repairs common with used cars.
2. What Are Your Preferences?
If you have your eyes on a specific model or colour, the best way to get the exact features you want is to purchase a brand-new vehicle. New cars come with mobile connectivity, easy navigation, and multimedia connectivity. However, if this is your first time owning a car, opting for an older model is a better choice. You might even be surprised by the variety of used cars available in your price range.
3. What Is Your Maintenance Budget?
While used vehicles have a lower price, they might not offer you better value for your money. Older cars are prone to frequent repairs, and you might have to spend a few thousand dollars on a complete overhaul and fitting. Additionally, you’ll have to set aside money in your monthly budget for the inevitable repairs of an older vehicle. However, you can reduce maintenance troubles when choosing trusted dealerships for used cars for sale in New Brunswick. Trusted dealers provide you with well-maintained used vehicles that offer you value for your money.
4. How Long Do You Plan to Drive the Vehicle?
The biggest drawback of a new vehicle is the depreciation factor. New cars lose around 20% of their value within the first year of ownership. If you plan to exchange your vehicle in the next few years, a new car could cause you to take a financial hit due to the depreciation. However, if you plan to drive your vehicle for the next decade or more, a new car makes more sense financially.
Additionally, if you plan to take a big-ticket loan like a home mortgage, taking a large car loan could impact the size of the mortgage you can get. With used cars, you have more flexibility. You can opt for a stylish, sporty vehicle right now and switch over to a family-friendly minivan later as your family grows.
Whether you’re shopping for a new or used car, ensure that you use an auto finance calculator to find a vehicle and loan that fits your lifestyle and budget!
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