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Why should you buy pre-owned instead of a brand new vehicle?

Advantages & Disadvantages

For Kitchener-Waterloo car buyers, new cars aren’t always the way to go. In fact, for the common folks, in most cases, it’d be better off for them to look at the used market instead. Some of the advantages of purchasing new are obvious and needs little reiteration. However, before delving into the car market, you might want to know why you should avoid going new.

1. Higher Upfront Cost – Comparison

Obviously, the biggest con there is to buying new is that you’d be buying something new. New cars almost always cost more than their used counterparts, other than in some extremely specific cases. In fact, for models that aren’t receiving a major update anytime soon, you’d be better off just looking for 1 to 2 years used models and end up with a better trim package than you’d muster from a new model.

Eminently, the argument that can be made here is the fact that many manufacturers are liaising with dealers to offer very appealing financing deals that undoubtedly attract attention. However, these 0.99% APR deals or 0% financing are typically only applicable to those with stellar credit scores. Admittedly though, sometimes dealers can offer very tempting instant cash rebates. Thus you should always shop around between new and used models.

2. Hefty Depreciation

Not so plain though is the massive depreciation hit that every new car gets inflicted as soon as they leave the showroom floor. When your shiny new car has the specifications you want, and you drive it off the showroom floor, on average you can expect an immediate 11% depreciation hit. Within its first year, a new car on average depreciates by approximately 20%. Of course, this depends on the make and model.

This means that if you’re opting for zero down payment or a long-term loan with less monthly payment, you can end up with negative equity on your vehicle. Basically, your car is depreciating so much that after one year, you’d actually be owing to the loaner more money than your car is worth.

For example, say that you’re buying a new Ford Fiesta SE hatchback, an excellent car in its segment. With Ford’s current financing deal which is 3.99% APR over an 84 month loan period, it’s estimated that you’d be paying $320 monthly. The vehicle price with all the fees included is around $23,362. After the first year, the car would be worth around $18,923. However, if you make the loan payment monthly, you would have paid back $3,840, meaning that you’ll still be in debt for $19,522. You’re progressing on the loan, but now your car is worth less than what you’re paying for. This will be a particular concern if you intend to trade it in after a year or two, as the dealer considers the trade-in value to be what the car is worth. The negative equity is still there, and you’ll just be compounding the debt if you finance another car then.

3. You’ll Discover Problems First

Buying new, especially when a model just received a refresh, means that you’ll be the one to deal with all the model defects first. Of course, most manufacturers will definitely repair any factory issues under warranty, but it’s still quite the bother when your brand new car breaks down. Being a new model also means that there’ll be scarely any long-term reliability report, and it means that you’ll be buying blind.

A pretty recent example is the whole Ford Powershift issue, which only affected some Ford models equipped with the Powershift transmission. Of course, now that the issue is well documented, you can look for either unaffected models, or even used models with the problem already resolved. This is only a minor foible, but at times there might be safety defects that can prove fatal should you be the one to experience it first-hand.


With all that said, buying new isn’t all bad. You don’t have to worry about previous owners, maintenance items, etc. However, for folks that intend to save a bit of money, there’s nothing innately wrong with going used. Considering that used dealerships are increasingly cautious at curating their own inventories and even offering limited warranties, the advantages of buying new are less significant now. If you still have questions about buying new vs buying used, don’t hesitate to get in touch with us at Lebada Motors. We’ll be sure to sort you out with the right car for your application.