More people than ever are turning to used cars as their vehicle of choice in Canada – and the advantages of doing so are obvious.
Modern cars are designed to last much longer than vehicles of the past, and the rising popularity of car leasing means that there are more high-quality pre-owned cars on the market than ever.
If you’re not sure whether or not a used car is right for you, let us convince you – here are the top 7 ways that buying a used car can save you money.
Lower Down Payments
It’s usually best to put down a large down payment on a new car – 20% is the norm, and a good target to hit if you can afford a new car. A higher initial down payment allows more favorable loan terms, due to the higher cost of a new car.
However, used cars are often much less expensive – so instead of putting, say, 20% down on a $30,000 car, you can put down 10% on a $15,000 car – and still have a lower monthly payment on your used car than you would on a new car.
This makes a used car a great investment if you’re looking to keep a tight budget when it comes to an auto loan – most experts recommend not exceeding 20% of your monthly income when financing a car.
Insurance costs are based primarily on the value of a car. Naturally, this makes sense – a $30,000 car costs more to replace than a $15,000 car. So when you buy a new car, you’ll have to pay a higher insurance rate due to the higher value of the car.
Conversely, when you buy used car, you can avoid high insurance costs. Your car drives just as well, as a new car – but it’s not worth as much, which decreases your monthly premiums and puts more money in your pocket.
Avoid Initial Depreciation
Avoiding depreciation is probably the single biggest benefit to buying a used car. As soon as a new car drives off a lot, it’s no longer “new”, and it’s estimated that its total value plummets by 20-30% during the first year of ownership.
By avoiding new cars, you can ensure that you never have to take this initial depreciation hit. It’s estimated that a car loses about half its value over the first five years of its life, but depreciation slows after about two years. So if you can buy a three-year old car for a much lower price than a new car, you will also enjoy a fairly good resale value in a few years, if you decide to sell it.
Negotiations at a new car dealership are pretty difficult – the cars have a set value, and the dealership is usually not willing to go below sticker price.
Used car dealerships, however, tend to be a bit more flexible, as cars will vary much more in price and value. You’re not going to be able to negotiate a $15,000 car down to $10,000, but if you come in with a reasonable price and negotiate well, you can usually work with your used car dealership of choice to knock a bit off of the price tag of a high-quality used car
Shorter Loan Terms
The length of loan terms for new cars has been climbing in recent years – and is up to nearly six and a half years for new car purchases. Most new car dealerships offer a five-year financing plan at minimum, so you’re going to have to make payments for quite a while.
Since used cars are typically sold at a much lower dollar value, it’s easier to get a shorter loan term with a great APR – especially if you have a good credit history.
This will save you time, money, and allow you to pay off your car quickly, allowing you flexibility if you want to sell it within a few years.
However, even if you have bad credit, used cars offer a great way to start rebuilding your credit, and are much easier to purchase compared to new cars.
Fewer Hidden Fees
Clear coat? Tire sidewall protection? Premium paint? Vehicle fees? Documentation fees? Anyone who’s tried to buy a new car at a dealership has heard these kinds of weaselly terms – usually rattled off at the end of a buying agreement, increasing the price of the car by hundreds, or even thousands of dollars.
These hidden fees and extras are the norm at car dealerships – but generally, there are fewer hidden costs and fees associated with closing a deal at a used car dealership. Things are simple – find your car, get a great loan, and drive off the lot. No weaselly fees or hidden costs.
Lower Retail Sales Tax Upon Registration
If you’re in Canada, you’ll be paying your retail sales tax for your car upon vehicle registration – and a cheaper car will save you money, as you won’t have to pay quite as much tax. Every bit helps – lower tax means more money in your pocket!
Come To Ride Time – Find A Great Used Car
If you’re in Winnipeg, come to Ride Time’s new showroom today, and see our selection of high-quality used cars, trucks, and SUVs.
And if you’re anywhere in Canada, you can visit our website – our interactive showroom allows you to get an inside look at whatever car you’re interested in, and if you find the car that’s perfect for you, we can have it shipped directly to your door – no matter where you are.
We do all that we can to make your used car buying process easy, affordable, and simple – whether you have good credit or bad credit, we can get you a great rate on a wonderful car, and save you the time, money, and headaches of shopping for a new car.