New VS Used Cars || Don't Make This Costly Mistake!

new versus used is buying a used car a huge mistake right now that's what we're going to find out welcome to C Corner where we help you the consumer Master the process of car buying and car ownership in the past a common sense piece of advice was to purchase a lightly used car instead of a brand new car because it would save you a ton of money many Financial advice experts tend to go on and on about how brand new cars lose 20 to 30% of their value the second you drive them off the lot and continue to depreciate quickly after that and buying a used car that's already suffered the depreciation hit is the thing that financially smart people do well I'm going to tell you why that's often not the case and why buying a used car right now might actually cost you a lot more money than you think and could end up costing you more in the end but first a huge thanks to omvic Ontario's vehicle sales regulator for sponsoring a portion of this video as many of us know the car market experienced a severe car shortage over the past 2 years and this shortage has dramatically changed the value of vehicles what they sell for and how much they depreciate over time yes the inventory for new vehicles has been recovering throughout the year but they still remain incredibly low for a lot of popular vehicles and these low inventories have been keeping the selling prices really high the most popular Vehicles which include compact cars small Crossovers and SUVs and especially hybrids are incredibly tough to get the supply is nowhere near where it should be relative to the demand just look at 1 to three-year-old vehicles of these types are selling for and you'll see that the 30% depreciation hit that the financial experts spoke of Simply does not exist let's take an example of a very typical popular vehicle like a Honda Civic one of the most popular compact cars even now 1 to 2-year-old Honda Civics routin sell for more or less the same price as what you can purchase one for brand new and it's the same story for other similar compact models like the Honda HRV the Toyota Corolla the Toyota Prius and the Subaru cross trk here is an example of a Corolla with a price that's more or less the same as what you can buy a brand new one for and this is also the case for popular Crossover SUVs like the Toyota RAF 4 the Toyota Highlander the Subaru Forester the Hyundai Palace and the Kia toride and many other popular models too again just looking at the prices of these vehicles when they're lightly used makes you quickly realize how little sense they make and as for hybrids well they're pretty much non-existent don't even bother looking for used ones because they routinely sell for more or less the same price and sometimes even a higher price then what you can purchase the equivalent brand new one for used ones are selling for ridiculous ly high prices because brand new ones are so hard to get and they often have a very long waiting period even so if you have the patience to order a new one and wait for it to arrive why on Earth would you pay the same price for a used one now of course you're obviously not going to see this happen with every type of vehicle many luxury Vehicles pickup trucks electric vehicles and vehicles from less desirable and less popular brands do depreciate at relatively a normal rate but that is because the demand for these types of vehicles is not very high and not many consumers want to buy them most consumers just want affordable regular Vehicles hybrids and crossovers from reliable Brands and despite what other YouTube channels try to sensationalize about the car market crashing these high demand Vehicles remain in very tight Supply with very high prices so no you're not going to save 20 to 30% on the price for one of these specific types of vehicles when buying one lightly used and even if you are able to save say 10% on the price it's still not going to be worth it and could still end up costing you more money in the end an important thing to understand about used cars is that they often cost more to finance than new cars new cars typically have financing rates roughly between 3 to 6% sometimes as low as 0 to 2% when the interest rates are incentivized by the manufact factur now you're not going to get interest rates like that when financing a used car used car rates are normally around 7 to 9% for well-qualified buyers which means that on a typical four to 5ye car loan you could be spending an extra couple of thousand on the financing cost for a used car and that's going to pretty much wipe away any savings that you would have saved on the purchase price and even if you pay cash for a used car you are still going to lose money in other ways remember a used car even one that's 2 to 3 years old will have still lost a huge chunk of its original warranty maybe even all of it and that's thousands of dollars of value added when you're buying a new car so when you're only saving a few thousand on the price when buying a lightly used car you need to consider what you're sacrificing or what you're giving up in exchange for those savings here is a typical analogy say you're buying a brand new Toyota R 4 that costs $40,000 and the 3-year-old one that has 45,000 Mi or 60,000 km cost $36,000 so you think you have saved around $4,000 or around 10% on the purchase price by buying that used R 4 but what have you sacrificed or given up in exchange well you're going to have a vehicle that's lost most of its warranty protection it's going to have a fair amount of wear and tear which means that there could be potential maintenance and repairs like replacing the tires replacing the brakes and that sort of thing and at the end of the day you're going to have a 3-year-old vehicle which means that it's already lost 3 years worth of value and is all of that really worth it just to save $4,000 well I don't really think so this is why when it comes to vehicles that are high value again this means popular compact cars compact SUVs hybrids and so on you are far better off just buying one that's brand new provided you're paying a fair price without any dealer markups dealer add-ons or any junk fees you will be getting far better value for your money in the long run the very strong resale value that you get with these types of vehicles is obviously no help to someone who's buying one used but it does benefit you immensely when you're buying one that's brand new especially if you need to sell it or decide to trade it in down the road where you're going to get a lot more value now when does it make sense to buy a vehicle used well we'll get to that in just a sec but whether you're buying a vehicle that's new or used it's important to understand your consumer protection rights for example here in Ontario if you buy from an omvic registered dealer you may be eligible to access the Motor Vehicle Dealer compensation fund the compensation fund is a consumer protection program that's financed by Ontario's motor vehicle dealers so if something goes wrong with a vehicle that you purchase say you're subject to to A Series of Unfortunate Events with a dealer you as a consumer may be eligible to access the compensation fund which provides financial assistance to those who make a valid claim but if you buy a vehicle from a curbsider or from a private seller you're not going to be eligible for the compensation fund and you might not be eligible for any kind of consumer protection under omvic which is why it's so important to always make sure that you buy a vehicle from an omvic registered dealer to learn more about omvic and your consumer protection rights including the fund you can visit the omvic website more information can be found in the description below now getting back to the subject of new versus used when exactly does it make sense to purchase a used vehicle right now well it might make sense to buy a used vehicle if you're not paying a high financing rate or if you're able to pay cash and only when you're saving enough money for it to make sense when compared to the price of the equivalent brand new model for example if you're buying a brand new Honda CRV that's $45,000 and you can purchase a low mileage three-year-old one for say $35,000 close to a 25% drop that's something that might be worth considering it is especially worth considering if you can buy one from a Honda certified pre-owned or CPO program most new car manufacturers have a certified pre-owned program or CPO program where you can buy a lightly used vehicle that's been thoroughly reconditioned and inspected and often sold with a little bit of extra warranty protection through a new car dealer in the case of Honda their CPO Vehicles receive an extra 2 years of Powertrain warranty coverage up to 7 years from the normal 5 years of coverage so this is an example where buying a lightly used vehicle does make sense because you're saving enough money on the price when compared to the equivalent brand new one you're getting a vehicle that doesn't have too much wear and tear and most importantly you're getting a vehicle that's been thoroughly inspected and has plenty of warranty protection so overall it does make quite a bit of sense and because CPO vehicles are still protected under the original manufacturer warranty if you do have any issues you can get it taken care of at the dealer new car dealers typically get their used vehicles as tradein or as lease returns and they typically keep the highest quality examples for the elves to resell as CPO Vehicles So when you buy a CPO vehicle you're typically getting one of the highest quality used vehicles that's available to buy so remember there's no generalized rule that every new vehicle automatically loses 30% of its value the second it's driven off the lot that might be true for some vehicles but not for all and certainly not for popular Vehicles like the types that I covered earlier and if you're not saving a substantial amount of of money then don't even bother if you're looking at 2 to three-year-old Vehicles you realistically need to be saving at least 25 to 30% on the price when compared to the equivalent one brand new otherwise it's just not worth it and do not overpay for a used vehicle a used vehicle will drop in value and the worst kind of situation that you can put yourself in is when you're making payments on an old used vehicle that's starting to have repair issues and is worth far less than what you owe you not only need to make sure that you're buying a car for a good price but you need to also try and make sure that it's paid off by the time it's 6 years old or better yet pay cash which means that if you're buying a used car that's 2 years old you can only finance it for 4 years or if you're buying a car that's 3 years old you can Finance it for 3 years either way the car is paid off by the time it's 6 years old and if you're buying a used car that's already 5 to 6 years old well you should be paying cash for it and as for those who are still waiting for the used car market to crash it might not happen for the popular Vehicles like the way other channels expect remember car manufacturing and Car Sales went way down during the pandemic so there are way fewer 2 to three-year-old used cars that are being returned to dealerships which means that the supply of used cars is still going to remain tight for quite some time so it could still take quite a while while before we see that correction if it really does happen either way we'll have to wait and see so after watching this video let me know your thoughts on buying new versus used which one makes more sense for you and if you enjoyed this video make sure to like And subscribe you can also check out my other videos by clicking these links over here make sure to follow me on Instagram and if you need any additional car buying advice recommendations or help with getting a great deal on your next new car purchase make sure to visit carh helpc can.com thanks so much for watching watching and see you next time

Channel: Car Help Corner

Views: 54,925

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Id: nSeazG3vGFw

Length: 12min 32sec (752 seconds)

Published: Wed Apr 17 2024