As you begin exploring the car dealerships around Toronto, it’s important to explore your financing options. It’s important to look at what the options are if you buy a new car versus a used one. Taking the time to review your options will help you to make a better decision.
Financing a New Car
When you decide to buy a new car, you get to drive out of the dealership in a vehicle that no one else has ever owned. Financing options are plentiful, especially because there are so many lenders that are willing to help you finance a new vehicle.
There may be a variety of dealership incentives in order to drive the new inventory off of the lot. This may include zero or low APR on a few different models.
Although you’ll be able to achieve lower APRs than used cars, you do have to look at what you’re going to face in terms of car depreciation. Many vehicles will lose approximately 20 percent of its value within the first year. This can be difficult, which is another reason why loan terms are usually so much longer for new cars. They know that you’re going to need to be in the vehicle for a few years before it can hold any kind of real value for you.
Financing a Used Car
There will be more deals and specials when you buy a new car, but buying a used car is not without its charms. You will have the ability to get a car that has a lower sticker price, saving you money on your monthly payment.
The APR is going to be a bit higher in a used car than a new car. However, you will find that the loan terms are less. This works out well because you’re able to own your vehicle outright much faster. This can be a great thing for your budget if you can afford the higher payments for 36 months because, at the end of the term, you’ll own a car without having to make any more payments.
The depreciation works out to your benefit when buying a used car, too. You won’t have to worry about losing a significant amount of the value as soon as you drive it off of the dealership lot because the value has already taken a hit. You can simply enjoy the great deal that you were able to get.
In the end, you want a car loan that fits within your budget. It’s important to research the various options available to you. Consider both new and used cars at different dealerships. When looking at new cars or used cars, you might be able to find a window sticker. If you’re unfamiliar with it, a window sticker is a label placed on a car that provides detailed information about the vehicle.
For instance, if you’re interested in a Ford model, understanding the ford window sticker explained would help you find key details, such as the vehicle’s original price, standard and optional features, fuel economy estimates, safety ratings, and warranty information.
Another technique to consider when comparing cars is evaluating the total cost of ownership. While new cars often come with lower interest rates, used cars typically tend to have lower purchase prices and potentially lower insurance costs. Furthermore, you can use online tools like a TCO Calculator to calculate the total cost of owning both a new and a used car over time, factoring in expenses like maintenance, fuel, and insurance. This approach could help you make a more informed decision based on your long-term financial goals.
Ultimately, you’ll need to choose what’s right for you and your budget. Buying a new car may provide better financing options, but purchasing a used car could be a smarter long-term decision if you aim to avoid car payments. Remember, there’s no one-size-fits-all answer. The key is to research, compare rates, and select the financing option best suited to your financial situation. With careful planning and some research, you’ll be well on your way to cruising down the road in your dream car.