Buying a Car: New or Used?

An age old question: When buying a car, is it better to buy a new vehicle or look for a good deal on a used one? Of course, there is no one answer. This article addresses the most common factors which should be considered in making this decision.

Individual Needs

You must always consider your personal driving needs before buying a car. If much of your driving is long distance at highway speeds with rapid accumulation of kilometers, then you are probably wise to choose a new vehicle. On the other hand, if most of your driving involves short distances and local scooting around town, then a used vehicle may be perfectly fine, as there will be much less demand placed upon it.


Cost is a major distinguishing factor. A new vehicle will cost much more than a used one of similar make and size. In fact, a new vehicle may cost from two to four times as much, depending on the age and condition of the used one.


Depreciation is another significant element to be considered when buying a car. Unfortunately, vehicles lose their value, i.e. depreciate, rapidly, by as much as 20 to 30 % per year. How much and how fast they depreciate depends on several factors such as the make and model, the kilometrage, how they have been driven and how well they have been maintained.

Taxes and Insurance

Obviously, the more you pay for a vehicle, the more the sales tax will be. The difference in price between a new and used vehicle can involve several thousand dollars in tax.

If you choose a new vehicle, you are usually obligated under the financing terms and conditions to obtain full insurance coverage. This includes not only public liability and property damage (PLPD) to cover “the other guy”, but also collision and comprehensive coverage to protect your investment.

With a used vehicle, you may not wish to purchase full insurance coverage. For example, the cost of collision coverage for an older model may not be warranted, thereby resulting in significant savings in your insurance premium.


A definite concern with the used vehicle option is the cost of repairs, which has increased greatly in recent years due to inflation. In the past, some vehicle owners were able to reduce costs by performing their own basic repairs and maintenance. However, advances in automotive technology now demand highly skilled mechanics and specialized equipment to diagnose and repair certain problems, which is more costly.

Of course, small local garages, which may not have the specialized equipment of their larger counterparts, are still often capable of repairing many problems that arise with today’s vehicles, and at more affordable rates.


Another major factor in choosing a vehicle is reliability. Many vehicle owners value trouble-free driving, which is more likely with the new vehicle option. When buying a car, they are prepared to make the additional investment in order to ensure this dependability.


As with reliability, it is important to many vehicle owners that they have the peace of mind of having full warranty coverage when buying a car. This coverage, which is available with all new vehicles, provides repairs, and in some cases maintenance, at no cost to the owner. Coverage is generally for a period of several years with a kilometrage limit, eg. 5 years or 100,000 km, whichever comes first. Extended warranty coverage can usually be purchased if desired.


Ultimately, the decision between new or used when buying a car depends on two major issues: personal priorities and affordability. Regardless of your decision, be sure that the vehicle you choose meets your needs, and as mentioned in my article on Debt, do not allow yourself to be oversold!


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