Buying a Brand New Car: 3 Important Things to Consider

In 2021, new vehicle sales in Canada increased 7 percent. So, if you’re you in the more for new wheels, you’re making a popular decision, and with reason.

Although buying a used car often makes more financial sense, a new car comes with many awesome benefits. You don’t have to worry about its mechanical history, you get a factory warranty, and there’s that impeccably smooth drive of a new car.

But, buying a brand new car comes at a steep cost. On average, you’ll have to fork out about $50,000

Read on for a list of important things to keep in mind before making a purchase.

1. Can You Afford a New Car?

Of course, the first thing to look at is your financial ducks. Are they in a row?

If you’re anything like the average Canadian, you can’t afford to make a $50K purchase right now. At least not in all cash.

You have the option to finance a car with a loan, but your credit score and income need to meet lender requirements. If you have an “On Approved Credit” status, you stand a good chance of getting the loan at a favorable interest rate. Follow this page to learn more about the relationship between credit history and auto loans.

When drawing your car budget, don’t focus on just the purchase price. Account for repair and maintenance expenses, the cost of gas or electricity if it’s an EV, and insurance.

2. Electric Car or Gas/Diesel Car?

The electric car industry is expanding, with almost every major auto manufacturer introducing EVs into the market. This means people looking to purchase a new car now have to choose between internal combustion engine vehicles and electric vehicles.

Which way should you go?

The future undoubtedly belongs to electric cars, so you can as well jump in right now. EVs are cheaper to run than gas/diesel-powered vehicles and some models are eligible for a tax credit and other incentives.

There’s still a strong case to buy a gas car. With the charging infrastructure for EVs still inadequate, the convenience of fueling up in a gas station is unbeatable.

At the end of the day, your choice comes down to your personal preferences.

3. Depreciation 

It’s a well-established fact that new cars depreciate rapidly. Some experts say a new vehicle loses 10 percent of its value the moment you drive off the lot, and 20 percent in the first year.

A zero-mileage car is going to cost you a lot of money, so it’s prudent to consider the impact of depreciation, especially if you plan to sell it after a few years of use. If that’s the case, you might want to go for a used car since they’re known to hold up their value well.

Do the Math Before Buying a Brand New Car 

The allure of buying a brand new car can be irresistible. However, when you’re making such a costly purchase, it’s crucial to weigh the pros and cons. With this car buying checklist, you now know what to consider.

Explore our blog for more motoring and car ownership tips.

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