2020 Used Car Buying Guide


Is 2020 the year you buy yourself a used car? Perhaps 2020 is the year you upgrade your car? Regardless, you’ve come to the right place to learn everything you need to know before buying a used car in 2020!

Buying a used car over a new car is favourable for many reasons including cost savings and car predictability. However, there is a process involved with buying a used car. A big part of the process is research, which has become easier than ever with the internet, but you still need to do your part. Research is important because it’s what will allow you to find a diamond in the rust - precisely what buying a used car is all about! But let’s not get ahead of ourselves; all of the information you need to know before buying a used car in 2020 can be found below.

What to Look for in a Used Car

Woman holding car keys

Finding the car you want is definitely the most fun part of the process! That being said, this part of the process takes the longest amount of time meaning that patience is key. Try not to get discouraged if you don’t find what you want right away. Think of it this way, a car is a big investment which means it will take some time to find exactly what you want and are willing to pay the big bucks for. Below are some tips when looking for an optimal used car.

Make a List

notebook with pen for list

One thing you can do before starting the shopping process is to create a list of wants and needs. If you have kids and want a big car to seat them all, add it to the list. If you absolutely can’t go through winter without seat warmers, add it to the list - and so on. Once you have a checklist in place, it’ll be much easier to narrow down your options when shopping.

Reliability & Predictability

piggy bank and calculator

Another thing to watch out for is the reliability and condition of the car you’re considering buying. Once you’ve found a car you like, do a google search of the make, model and year to determine what the dependency is. A little google search can do wonders and will probably save you from purchasing a lemon!

Other things you can do to evaluate the predictability is figure out what the mileage is and obtain a CARFAX report. Both of these will give you an idea of the car’s wear and tear. By knowing this information, you’ll be able to assess the car’s overall condition and future performance.


Phone with charts

Ultimately, you’re working within the world of business and sellers are going to want to get as much out of the sale as they can. For this reason, don’t take the listed price as the final price. You do have some negotiating power when it comes to used cars, especially if you do your research.

Once you’ve narrowed down your options, take some time to research third party prices for the same car model to see if the seller is giving you a fair price. If they’re not, be ready to negotiate with the seller and provide the research you’ve found to bring the price down.

What to Look for in a Dealership

Car salesmen with customer looking at used cars

The dealership you choose is nearly as important as the car you choose. After all, you want to work with someone you trust, otherwise something could go wrong over the course of the sale. There’s a lot that goes on behind the scenes with a used car purchase. You want to work with a dealership that is honest and transparent. If other people have had positive experiences with dealerships before, chances are you will too. Before proceeding with a dealership, take a minute to research the dealership and read customer reviews.

Finding a dealership with the car and financing you want can be a challenging and time consuming process. It can be extremely frustrating to go from dealership to dealership only to get turned away for financing or not find what you want.

If you’re looking to minimize the amount of time you spend shopping around, consider working with an alternative lender that will match you with a dealership in your area. They will also match you with a lender that suits your unique needs making alternative lenders a one-stop shop. These types of lenders do the leg work for you making your shopping experience easier and quicker than ever. If this sounds like something you’d be interested in, you can complete your five minute application here with Car Loans Canada!

What to Look for in a Lender

Woman calculating her used car payments

Lenders are another key personnel in the used car buying process. This is precisely where money and commitments get involved. Ensuring the lender is legitimate and reliable is important. As with the car and the dealership, perform some research on the lender before proceeding to work with them. If they swindled someone else, they’ll swindle you too! Fortunately, you have more flexibility when it comes to picking car loan lenders, you might want to go with the dealership or shop around for your own handpicked lender.

There are several other aspects related to the financing portion of purchasing a used car, let’s explore them below.

Your Budget

In addition to the actual car purchase, there are other costs to consider.

It is extremely important to know these costs before finalizing a purchase because you don’t want to end up with a car you can’t afford. Here are some of the costs of car ownership you should consider.

Purchase price

The purchase price will likely be financed, but you still want it to be as low as possible. Keep in mind that there will usually be a sales tax on top of the purchase price as well as other miscellaneous fees.

Down Payment

Making a down payment is optional. Although, making a down payment will reduce the amount you owe and reduce the risk of negative equity.

Car Loan Payments

The car loan amount will depend on the length of your loan, the interest rate and the purchase price. This is a cost you’ll be paying for several years, you likely want it to be as low as possible. You can determine this cost ahead of time by getting pre-approved (discussed below).

Car Insurance

Fortunately, car insurance on used vehicles is typically lower than on brand new cars. That being said, you should still take the time to get a quote so you know what you’ll be paying.

Maintenance Costs

Gas, oil changes, winter tires and windshield wiper changes are all maintenance costs, and there are many more. Ensure that you have enough room in your budget for these costs.

Repairs Costs

Owning a used car means that at some point you’ll need to shell out some cash for a hefty repair. Older cars can only take so much, be prepared to pay for a repair at some point or another.

Registration Fees

Once you purchase a car, you’re required to register it in your province or territory. This fee usually comes annually, but it’s still a cost to consider.

Before shopping you should consider getting pre-approved. Getting pre-approved means working with a lender to determine how much they’ll approve you for a car loan. Not only will this confirm that you’ll be able to secure car financing, it’ll help you stick to a budget and have negotiating power with car salespeople.

Credit Scores

Lenders extending credit for a car purchase will definitely take a peek at your credit score. The good news is that there is no magic credit score you need to get approved for a car loan. Each lender is different and has unique requirements for their loan candidates. The trick is to find a lender that will work with your circumstances.

A good benchmark to work off of is 650 or higher. But with a credit score lower than 650, you can still secure financing. That being said, if you have poor credit, you might have to sacrifice favourable loan conditions and terms. The reality is you’ll be seen as a risky loan candidate which means more strict conditions and terms will apply to you. If you don’t get the greatest terms and conditions, you can always refinance your loan in a couple years for more ideal terms.

Before applying for financing, be sure to take a look at your credit score. It’s good practice to know what potential lenders are seeing so there aren’t any surprises on either side. By doing so, this will also give you the opportunity to improve your credit before applying.

The Anatomy of a Car Loan

Person calculating car loan amounts

It helps to understand what a car loan is and its various components before obtaining one of your own. By understanding the anatomy of a car loan, you can make better decisions for your car financing. Let’s explore each component below.

Car Loan Cost

Also known as the principal, this is the amount you’re borrowing to make your car purchase. This amount is the purchase price plus any additional fees or taxes less your down payment, if any. Part of your car loan payment goes towards this amount and the other part goes towards the interest.


Alas - the infamous interest! Interest is the cost you pay to borrow money. Of course, you want the lowest interest rate possible because that means you’ll pay less for the money you borrow. As mentioned, part of your payment will go towards interest.

Car Loan Payment

Once you take out a loan, you’ll be responsible for making a payment every period, such as a week or month. The payment is composed of a principal and interest amount. Your payment will remain the same, but the interest and principal breakdown will vary from period to period. Interest is higher at the beginning of the loan and decreases throughout the loan’s term.

Loan Term

This is the length of time you will repay your loan. The longer your loan’s term is, the lower your payments will be, but the more interest you’ll pay, and vice versa. One thing to note is having an extremely long loan term, essentially 6 years or longer, isn’t favourable because you could develop negative equity in your car.

Other Terms and Conditions

Your loan agreement will have other terms and conditions as well. Examples of other terms and conditions are conditions of default, repossession and early repayment. You should always read the agreement in full before signing to ensure that you know what you’re getting yourself into.

A Word on Extended Warranties

After all your research, you might still be skeptical about something going wrong with the car you’re considering purchasing. If so, you may be considering an extended car warranty. The choice is entirely up to you, but recent studies have shown that they’re not worth it. In fact, a recent survey showed that 55% of people who purchased an extended warranty didn’t use it and wouldn’t purchase one again. The same study also reported that the cost to repair the car on their own was cheaper than the cost of the warranty they didn’t use.

In the end, the choice is yours, but it’s helpful to know about other consumer’s experiences. Perhaps you want to spend a little extra just for peace of mind. If you decide not to purchase an extended warranty, you should set aside some money for potential repairs instead. Either way, it’s a choice you have to make during the process!

Hit the Car Lot with a Conscious!

Person shopping with credit card, holding several bags full of purchased goods

In relation to used cars, the old saying “knowledge is power” holds true! Knowing everything about purchasing a used car will help you make educated decisions in relation to your personal finances. You will also be able to tell what’s a good deal, and what’s not, and know when to negotiate a better deal. Now you can hit the car lot with a conscious and get the used car you’ve always dreamed of in 2020!

If you’re considering buying a car, be sure to check out our rates page to see what our lenders are offering. Once you have an idea of your interest rates, check out our car loan calculator and estimate what your monthly payments will be! Get pre-approved for a vehicle today by completing our application!

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