Every year, we’re breaking new records in automotive sales and prices. Last year, over 1.6 million cars were sold and registered in Canada, and used car sales are on track to break that record again this year.
Fortunately, there are ways to save money and make the right decision for your needs. It only requires a little diligence and care. Here’s everything a car buyer needs to know before buying a used car!
Benefits of Buying a Used Car
Compared to new cars, used cars come with some incomparable advantages. Here are some of the most important used car benefits to mention!
More Financially Sound
The average cost of a new car in 2022 is over $62,000 ($48,000 USD), which is just not feasible for most Canadians.
Let’s be very clear here, cars are not investments. Cars depreciate in value over time, so the best you can do is limit the financial damage it causes. A used car is the best way to do that.
Generally speaking, buying a car that’s 2-3 years old is the best financial decision. This is because the bulk of depreciation has already run its course without sacrificing much quality. While this depends heavily on the vehicle and your financial situation, that’s a fair way to look at it.
Many people purchase new cars and only keep them for 60,000 or 80,000 miles, and they take good care of them at the dealerships for a high resale value. These people eat that 30% to 40% depreciation for you while still taking good care of the car. On average, these are the vehicles to buy.
Older Cars Perform Better
In all seriousness, cars of the previous generation tend to last longer than newer cars. We all know about planned obsolescence, and modern cars are a great example.
Working on a vehicle from 2008 is a lot different from working on a vehicle from 2022. There’s also a lot less electrical dependence, which leaves fewer opportunities for major damage. Essentially, when things go wrong on an older vehicle, it’s often a lot cheaper and easier to fix, and less is likely to go wrong in the first place.
Industry-wide, it seems that cheaper parts are being used in vehicles. Luxury components are through the roof on newer cars, driving up the price, but the core components of the vehicle are suffering as a result.
Easier Maintenance
If you work on your own car or like saving money at the mechanic, get a used car. They are much easier to work on as they aren’t covered in electrical components. Key components are much easier to reach, and maintenance is a lot easier.
History
You can save a lot of money by buying a used car, and you can easily verify its history online. Using tools like CarFax vehicle history reports can tell you how it’s been maintained, how many owners it’s had, and whether or not it’s been in any accidents.
Even more, you can find out about the vehicle as a whole! There are plenty of vehicle owners happy to share their experiences online who may have owned a car for 10 years or longer.
A New Car Buyer Guide to Used Cars
Now that you know why buying a used car is better than buying a new car, it’s important to understand that there are also key differences when buying a used car. Here’s what you should do.
Research the Vehicle
If there’s one major benefit of buying an older vehicle, it’s the ability to hear long-term testimony. The stats you hear about new cars need to be taken with a grain of salt. The reason is that there simply hasn’t been enough time.
Essentially, you can’t get an idea of how long a vehicle can last if it’s brand new. If you have an idea of what type of car you want, do some research to find the right model for your price range and needs.
For example, if you need a high-quality pickup truck, you may find that the Ford F-Series has what you’re looking for. If you just need a commuter car and don’t have a lot of money to spend, then an older Toyota Corolla or Camry may be perfect for your needs. When buying used, you want to find a car that is known to last longer than 200,000 miles.
Regardless, read from past and current owners and see how they like the vehicle. This is especially important for vehicles over 5 years old, as you can get an idea of what type of problems drivers have experienced. There’s no such thing as a perfect car, but some are certainly better than others!
Choose a Reputable Dealer
The dealership can make a world of difference. If you plan to buy from an owner, understand the risks that come with it, and find a good deal before going through with it. However, reputable dealerships are far safer.
We’re fortunate enough to live in a world with the ability to instantly learn about dealerships. Research the dealership in advance and read reviews from previous customers. One-star and five-star ratings mean nothing without context, so see what people have to say.
Sometimes, a positive or negative rating could simply be for service or something else unrelated to the deal. If you’re worried about the financial aspect, that’s what you should look for.
Test Drive and Inspect the Vehicle
Always test-drive a vehicle before you even consider purchasing it. Test how the vehicle accelerates and stops, how it handles on the road, and take note of any potential issues. From there, here are some things to inspect on the road:
- Listen for noises
- Test window and door functions
- Make several turns
- Pay attention to possible odors
- Comfort in the vehicle
- Brakes and gas functioning
- Transmission shifts
Pay attention to these while driving, and feel free to drive the car to another lot to inspect the vehicle without a salesperson breathing down your neck. Keep the car running and open the hood to check for oil or fluid leaks. Pay attention to any concerning noises or odors under the hood.
Also, while inspecting the vehicle, you should look under and around the car for rust or damage. Take a look at the tires, mirrors, lights, and body. Having an extra person with you is always a good idea.
Get a Pre-Purchase Inspection
Pre-purchase inspections from a trusted, third-party mechanic are essential before buying a vehicle. If you know what type of vehicle you want and you find one that passed your test drive, bring it to a local mechanic. Don’t trust the dealership or their “guy down the street.”
It should only cost around $90 to $140 for the inspection, and it could prevent you from making a terrible mistake. Try to get a quote on how much all of it would cost, and see if there are some things you can do yourself or have the dealership do for free.
For example, if something is wrong with the tires, this may not be an issue. However, if something is wrong with the transmission, engine, or suspension system, then you should probably look the other way.
Save Money Ahead of Time
Saving for a larger down payment or buying the car in full will go a long way! Every dollar you put down now is several cents you’ll save in interest, cut down on your monthly payments, and possibly help you pay off the car sooner. Every $1000 you put down now will save you around $20 each month on a 4-year loan.
Find the Right Loans
Especially with used car prices and interest rates at such high levels, you could save a lot of money by choosing the right loans. It doesn’t hurt to shop around.
Also, if you’re worried about buying a car because you have bad credit, there are options for you. Rather than taking a risk with a 20-year-old vehicle, it’s best to find a loan and get a car that you know will last. Apply for a loan now, regardless of your credit, and see what you can get!
Ride Around in Style
Nobody said buying a car was easy. It’s an important financial decision that will impact you for years to come.
However, now that you have a helpful used car buyer guide at your disposal, put these tips to use. Save your money ahead of time, do your research, and do your due diligence when shopping time comes!
Stay up to date with our latest financial tips, and don’t hesitate to contact us with any questions or for help securing a loan!