7 Reasons Why A Slightly Used Car is a Better Buy
Posted on February 28, 2020
Most people buy a new or used vehicle every 6 years. With new cars costing about $40,000, this means that your vehicle costs can quickly add up to over $100,000 in your lifetime. Because of modern safety standards, many vehicles look almost the same. Brand new models often have identical features and an identical design compared to the slightly older model.
So if a new and used model is so similar, does it make more sense to buy used?
Buy an Almost-New Car and Save up to 40%
A surprising number of people buy a brand new car and bring it back in the first year. They might start a family, move overseas, or switch to a completely different style of vehicle. The reasons are endless, but people’s needs constantly change. This leads to a steady supply of almost-new vehicles which have already depreciated by about ten percent.
Since the median price of a new car is $40,000, you could buy a “new” used car and save about $4,000 straight away.
Here’s the shocker – the average new car depreciates 30-40% in the first 12 months. That’s an incredible $12,000 - $16,000 in potential savings for a used car buyer.
(Luxury vehicles often depreciate faster!)
The rate of depreciation depends on the brand, so it’s very worthwhile to do your homework before you buy. (Especially if you’re looking at sportscars.)
Pay Less Taxes
The price of a used car is about $21,000 cheaper than new, and the HST on this $21,000 difference amounts to $2,730!
There are additional taxes that apply just to brand new cars. Air taxes and tire taxes amount to about $150. Buy used, and you’ll save enough to take yourself out for a nice dinner and still have money in your wallet.
Avoid Administration Fees & Freight
Some dealerships sneak fees into your total, like surcharges, administration fees and a pre-delivery inspection fee. These supposedly cover the cost of paperwork and inspecting the new vehicle from the factory to ensure that it’s problem-free. Luckily, dealerships who charge these fees are forced by law to include them on your paperwork.
An even bigger cost for new-car buyers is the freight or transportation fee. This is the price of shipping your vehicle from the factory to the dealership. It’s applied to all vehicles, despite the model or the proximity to the factory. Entry-level models pay the same as luxury models of the same brand. So if your Toyota was manufactured in Woodstock, and you buy it in Brantford, you’ll pay about $1,785 in freight for a 30 min drive. (That’s enough to ship yourself someplace warm for winter!)
Avoid Haggling Over Extras
You might think that you only have to haggle over the price of the car. But an average person spends 3 hours at the dealership, and more than half of this time is spent doing financing and insurance paperwork.
Imagine your mental exhaustion as you are pressured to buy extras like theft protection, rust coating and prepaid service plans. Those who are leasing have to also consider wear and tear warranties and penalties for extra kilometres.
All these extras make the dealership money, and make your monthly payments harder to manage.
Most used cars still have some remaining manufacturer warranty. If you want peace of mind, you also have the option to buy an extended warranty.
Save on Service
Some people appreciate pre-paid service plans. In order to negotiate a better-than-retail price on these plans, you’ll need to know the actual cost of the required services. These plans do not typically cover wear and tear items like brakes, tires and windshield wipers. There are sometimes discrepancies between what the manufacturer suggests you do for maintenance, and what your local service centre suggests that you pay for.
Service plans might also limit you to a single dealership, which can be frustrating. Your dealer’s service centre might be outstanding, or it might not. With a used vehicle, you have the freedom to bring your vehicle to a business you trust.
Sometimes parts can be cheaper after a vehicle is a year old. This may be due to the availability of quality aftermarket brands. When you’re not under a lease, you can easily shop around for better prices.
Pay Less Insurance
Generally, a more expensive car will cost you more insurance. A brand new car costs more to replace and is usually more likely to get stolen than a slightly older model. So the insurance companies need to charge you more to cover this risk.
Pay Cash and Save on Interest
It can be surprisingly difficult to pay cash for a new car. This is because many dealerships make a percentage of your loan interest, just like an insurance broker would. If you purchase a $40,000 vehicle and finance it at the current interest rate of 5%, you’d end up paying $5,291 in interest.
“But… I can’t afford to pay cash.”
Not all of us have thousands in the bank. For example, a new graduate with a new job might need a car but not have the cash in the bank.
Is the only option to lease a new vehicle?
Not at all. AutoPlanet offers traditional financing on used vehicles and also subprime financing for people with no credit or difficulty getting a traditional loan.
“Won’t it be a hassle to haggle over a used car?”
The auto industry has a bad reputation – for a reason. Most people dislike having to haggle over prices and be on the lookout for hidden fees.
Gone are those days.
At AutoPlanet, we want you to have a stress-free experience. We offer a no-haggle market-value sales price, so the price you see is the price you pay.
Our sales team is commission-free, which allows you to enjoy a much more relaxed shopping experience.
We have Ontario’s largest indoor showroom with over 600 certified used cars, trucks and SUVs. Our goal is to help you drive your favourite vehicle home.
“What if the vehicle has problems?”
Love it or return it. We offer a 5 day or 500 km return policy.
Because most of our inventory is only a couple of years old, most vehicles still have factory warranty remaining. Plus, our vehicles go through the most comprehensive vehicle reconditioning process in the industry. They are hand-selected for top quality, and have all passed a thorough 120-point inspection.
We also provide you with a free car-fax report, so you have the vehicle’s history and the information you need to make an informed decision.
Step-By-Step Strategy for Getting a Great Deal
- Research the makes and models you’re interested in. Read reviews.
- The first big depreciation is in the first 12 months. So consider a current or 1-2 year old model.
- Do you have a trade-in? Some dealerships with non-transparent pricing will give you a deal on your trade, but charge more for your new vehicle. With no-haggle pricing, you’ll know exactly what you’re paying for your new vehicle and what we can offer for your trade-in.
Ready to research models? Browse our inventory online. Then contact or visit us, and we’ll be happy to answer your questions and let you test drive the vehicle of your choice.