While many car dealerships offer 0% interest rates to incentivize buying a new vehicle, this results in you buying a more expensive car that will depreciate much faster than a used car. Buying used also allows you to avoid many additional fees and costs for extra features. Finally, used cars cost less to insure than a purchased or leased new car. This is because it has already depreciated and is less expensive to replace should it be involved in an accident.
The most significant amount of depreciation occurs in the car’s first year of being on the road. After the first year, the car depreciates at a fairly steady rate of about 17.5% on average. In order to give an example, we’re going to use these numbers to demonstrate how to calculate the rate of depreciation of a base model 2021 Toyota Camry.
Many Canadian’s don’t have the finances to buy the 2021 version of a particular model, but if they chose the 2018 or 2019 model, they’ll find it much more affordable. Many of the extra features in new cars like an upgraded audio system or engine will cost you additionally, where with used vehicles, you get the car as it comes for a fixed price, regardless of its extra features.
While many people worry about the reliability of buying a used car, dealers thoroughly inspect and certify all used vehicles before they’re sold. It’s not uncommon for a used car to still have its original warranty, so if you do run into problems, you can rely on the warranty for coverage. With this said, a great perk of buying used is you can easily research the long-term performance of the vehicle. With new cars, it’s really unknown if the car has a flaw that will require maintenance after a year of being on the road.