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Is It Better to Buy a New or Used Car in Ontario? 2022 Guide

car loan regardless of credit score

With all the craziness happening in the world right now the car market is doing strange things. But even when the world is all topsy-turvy you’re still going to need a car. The Big question is will you buy a new and used in Ontario? This article will help you decide.

Should you Buy a New or Used Car in Ontario

Initial Price

The first factor to consider when buying a new or used car in Ontario is the starting price. Which even in these crazy times is still what you’d expect, Brand new cars cost more than used cars. The main difference now is that both prices have gone up significantly due to market shortages.

New car’s are more expensive because they’re new, they have all the latest features and they have a clean slate history, none of this should be surprising, it’s not until we get to some of the other factors that things get odd.

 

Depreciating Value

Credit Karma Depreciation

Source: Credit Karma

 

As you no doubt know, cars are a depreciating asset, meaning they lose value over time, and this depreciation is most extreme when the car is brand new. It’s said that a car loses 30% of its value as soon as you drive it off the lot. This is the reason why used cars are cheaper than new cars, because they become worth less money over time.

 

At least that's how it’s supposed to work in normal times, but we don’t live in normal times.

The mass shortages of new cars being produced is doing weird things to the value of cars. The depreciating value of a lot of cars has slowed down significantly and in some rare cases has even been crawling back up, gaining back value it didn’t have before. It’s not exactly a reliable trend to bank on, but if you get lucky a decent used car could be a great investment.

Running Costs

 

Another big factor to consider this year between a new or used car in Ontario is the massive surge in gas prices, which is having its own significant effects on the industry, but also for day to day drivers. When you’re shopping for a car, one of the biggest things on your mind should be fuel efficiency. Or if you’re feeling extra modern, whether you should even buy a gas powered car.

 

The electric car market is going to boom over the next few years, there was already a push and the gas prices will accelerate it even further, unfortunately though the market for EV’s is still new and there's not really a used electric market available at the moment, if you want one you’ll probably have to buy new.

 

This will be more expensive in the short term but in the long term, especially with gas prices as they are, it will save you a lot of money.

 

With all the craziness happening right now it can be tempting to just hold off buying a car until things calm down, assuming that they ever do. But the craziness can be to your advantage if you play your cards right. Now, let's move on to the pros of a new and used car in Ontario

 

Pros and Cons of Buying a New Car

 

All-New 2022 Ford F-150 Lightning Coming Soon!

All-New 2022 Ford F-150 Lightning Coming Soon!

Pros of Buying a New Car

 

New Technology and Safety: New cars benefit from the latest technology and safety innovations. If you’re interested in either of these, buying new is your opportunity to get the newest tech.

 

Straight off the line: Nobody has driven your car except to drive it off the line. You’re the first owner, taking the car from new, creating your own imprint in the driver’s seat and being the first to enjoy everything your new car brings.

 

All New Jeep Grand Cherokee Right off the Truck at Unique Chrysler

All New Jeep Grand Cherokee Right off the Truck at Unique Chrysler

 

Dealer or manufacturer incentives: New cars often come with incentives including 0% finance, free servicing, full warranty, free upgrades and other offers. You don’t get those very often with used cars!

 

You can add factory features: While cars can be customized with aftermarket parts, only new cars can have options fitted at the factory. This can have a huge influence over how the upgrade works or how it looks.

 

Cons of Buying a New Car

 

Price: There is no doubt you pay for the privilege of being  first. You’re paying at or close to MSRP for the car and will need a larger loan or more of a down payment to cover it.

 

Depreciation: New cars depreciate quickly in their first 5 years and anywhere between 20-35% in their first year. That’s a lot to contend with when you’ll be paying your auto loan for the next few years.

 

First edition issues: If you’re driving the first version of a new model or new edition, it isn’t uncommon to experience teething problems or have to contend with recalls.

 

There is always something newer: For those that are always looking for the latest version of something, new cars come along all the time, so satisfaction can be fleeting.

 

Pros and Cons of Buying a Used Car

 

Used 2016 Mercedes-Benz Available at Car Nation Canada Direct

Used 2016 Mercedes-Benz Available at Car Nation Canada Direct

Pros of Buying a Used Car

 

Lower cost: Used cars cost much less than a new model. Even if you buy a car just a year or two old, you’re paying significantly less than a new car price. That can means a lower Burlington car loan or a more premium car depending on your situation. You'll be able to buy bigger or better by being able to afford a step up in terms of size, luxury, or technology.

 

Less depreciation: Once that initial year is over, depreciation slows appreciably. It still happens but to much less of a degree than if it was new. That means far less chance of going upside down or losing too much value as the car ages.

 

Still get technology: While used cars won’t have cutting edge technology, buy something a year old and you’ll still get lots of new features. That does mean not having the very latest technology but you won’t be far behind.

 

Cons of Buying a Used Car

 

Less warranty: New cars can come with many years’ warranty and free servicing. Most used cars will come with 3-6 month’s warranty at the most. There are other warranty options available though.

 

No incentives: There are usually few dealer or manufacturer incentives for used cars. Dealerships may offer special deals but the best will be reserved for new models.

 

Car loan interest can be more on used cars: Depending on the car loan and the lender, the interest rate you’ll pay can be higher on a used car.

 

Increased likelihood of maintenance or repair: The older the car or the more miles it has done, the more likely it will need work.

 

Used BMW being serviced

Used BMW being serviced

 

At the end of the day, there is no right answer to what you should buy. Whether you buy a new or used car in Ontario completely depends on your current financial situation as well as your personal preferences, but hopefully we've given you some things to think about so you can come to a clear decision.

 

We have an awesome selection of new and used cars here at Car Nation Canada! Click here to get pre-approved online with us or click here if you have any questions or inquiries about buying a new or used car in Ontario!