Used vs. new cars - MoneySense

Used vs. new cars

What’s the better deal?



People are of the opinion that buying new is always more expensive than buying used. While there used to be a huge gap between the prices of new and used, the demand for used cars has shot up, making them scare and more expensive. And since you can’t just use the sticker price as a guide – more stuff breaks on a used car as components get to their best-before dates – if you really want to save, you need to factor all the pieces in.

If you’re shopping for used, make sure you check with publications like Consumer Reports or Phil Edmonston’s Lemon-Aid books to find the highest quality used cars.

If you’re financing, look at the cost over the life of your loan. With so many new cars offering 0% financing, paying 12% on a used car may wipe out the savings you’ve made “eliminating the depreciation factor” by buying used.

Decide how long you plan to keep your car and amortize the cost over the life of the car. You should be able to keep a new car for 10 years. If you’re buying used, you have to think about what cars will cost when it comes time to replace the one you’re buying.

Low sales of new vehicles put pressure on manufacturers and dealers to bring prices down by offering rebates and special incentives. Since there has been a trend to keeping used cars longer, this trend won’t last forever. Eventually the used market will be exhausted, and that’ll drive demand up, also driving up the cost of new cars.

If you feel like a Christian facing off against a lion in the car-buying arena, using a company like Dealfinder can help take the guesswork out of the used-car decision. Pay a little upfront for some expert advice and you can save thousands.