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[OP]
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Jul 17, 2014
104 posts
34 upvotes
Canada

New Car vs. Used

Hi Everyone,

My family's car is breaking down and we need a new one. Repair of our existing car is not feasible. Ideally, we would like to spend in the low $20 000 but no more than $30 000. We are in Ontario, and plan to finance the purchase, say for 7 years. We are in the market for an SUV.

I have been checking the used and new markets for a while, and there are a lot of options...
It's kind of crazy how most recent cars , say 2015 models, are within 5 to 10K of brand new cars, and charge you 6.99% interest at the minimum. I don't think it makes sense going for a used car at the price difference and increased rate when financing for long periods of time, as often the interest payments make up the difference of buying a new car.

Lots of dealers are having sales (0% interest), I have come up across the two cars following:
  • Hyundai Tucson 2020 (Starting at 25K)
  • Kia Seltos (Starting at 22K)
Which of both is better? Is Kia or Hyundai good?? Are there any other deals I am not aware of?

Have you bought a new car recently? Please let me know your opinion and thank you !
17 replies
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Jul 17, 2008
11042 posts
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sakonpure6 wrote: Hi Everyone,

My family's car is breaking down and we need a new one. Repair of our existing car is not feasible. Ideally, we would like to spend in the low $20 000 but no more than $30 000. We are in Ontario, and plan to finance the purchase, say for 7 years. We are in the market for an SUV.

I have been checking the used and new markets for a while, and there are a lot of options...
It's kind of crazy how most recent cars , say 2015 models, are within 5 to 10K of brand new cars, and charge you 6.99% interest at the minimum. I don't think it makes sense going for a used car at the price difference and increased rate when financing for long periods of time, as often the interest payments make up the difference of buying a new car.

Lots of dealers are having sales (0% interest), I have come up across the two cars following:
  • Hyundai Tucson 2020 (Starting at 25K)
  • Kia Seltos (Starting at 22K)
Which of both is better? Is Kia or Hyundai good?? Are there any other deals I am not aware of?

Have you bought a new car recently? Please let me know your opinion and thank you !
I have a Forte and it's been solid for over 5 years. Both Kia and Hyundai would be the same, so just go with whichever offers the most bang for the buck.
Deal Addict
Jan 12, 2017
2060 posts
1981 upvotes
financing used car is usually not recommended because of high interest rate.

I'm not sure about Seltos since it just came out, but judging by the price tag I think it's smaller than Kia Sportage and competes with Hyundai Kona, not Tucson.
You should be comparing Sportage and Tucson instead.
and Both cars are pretty much identical except for the looks. Boring CUV, nothing special.
Go with which ever is better deal.

I bought my last 3 cars through Financing, Genesis, Tucson and Sorento
Don't be fool by 0% interest, it's a bait to get you in the door. 3 cars I finance, none were at 0% even though I went in with 0% in mind.
Often 0% only apply to base model which dealers never stock because nobody buys base models, and they will actually give you better financing deals than 0%, eg cash discount that's more than the interest you save at 0%.

kia-canada-kia-sorento-84-month-0-finan ... d-2378021/
Read this thread currently going on at Hot Deal forum
Although this is deal for Sorento, people are discussing 0% interest vs cash discount with interest rate.
Deal Addict
Oct 24, 2010
1354 posts
1128 upvotes
Ottawa
I'm sure the debate has happened a lot on RFD, but I never buy new. It depreciates so much as soon as you drive it off the lot.

Research some reliable makes, models, and years and then shop the used market. Look for something in a private sale that was gently used with low mileage, particularly if you have the liquidity to buy in cash. Take it for a test drive and decide if it's in good enough quality to pursue. If it's in good shape, take it to a mechanic you trust to do an honest, detailed pre-purchase inspection for a couple hundred dollars. Then make an offer and negotiate a price.

My last two cars were purchased this way. Both were driven by elderly couples who primarily used them for errands.

2009 - I bought a 2004 Honda Civic SE with <50,000 km for $8k. I sold it in 2019, after 10 years and adding over 200,000 km to it for, $2500. In the 10 years I had it, putting 60km round trip on it daily commuting to work, it was mostly just routine maintenance (and sadly that included 2 damned fan belt changes).

2018 - Bought a 2013 Toyota Corolla LE, with all of the upgrades available to that year. 70,000 km for $12k. 2011-2014 Corollas at dealerships, with more miles and fewer options, started at $13k +tax. It was driven by an older gentleman who replaces his car every 5 years when he's done paying for it. I took it to a mechanic I trust and the only thing that needed changing was the tires (which I already knew). It's so far required 0 maintenance beyond routine.

Not to spark the debate or anything, but vehicles are a liability. If you have the cash, don't finance them, and I advise against buying new. If financing is your only option, though, do as others have suggested and see if you can get a lower interest bank loan. Debt is cheap right now.
Last edited by Dynatos on May 28th, 2020 8:39 am, edited 1 time in total.
Newbie
Apr 27, 2020
8 posts
7 upvotes
sakonpure6 wrote: Hi Everyone,

My family's car is breaking down and we need a new one. Repair of our existing car is not feasible. Ideally, we would like to spend in the low $20 000 but no more than $30 000. We are in Ontario, and plan to finance the purchase, say for 7 years. We are in the market for an SUV.

I have been checking the used and new markets for a while, and there are a lot of options...
It's kind of crazy how most recent cars , say 2015 models, are within 5 to 10K of brand new cars, and charge you 6.99% interest at the minimum. I don't think it makes sense going for a used car at the price difference and increased rate when financing for long periods of time, as often the interest payments make up the difference of buying a new car.

Lots of dealers are having sales (0% interest), I have come up across the two cars following:
  • Hyundai Tucson 2020 (Starting at 25K)
  • Kia Seltos (Starting at 22K)
Which of both is better? Is Kia or Hyundai good?? Are there any other deals I am not aware of?

Have you bought a new car recently? Please let me know your opinion and thank you !
Recently bought a Tucson Luxury trim. There's definitely a fair price to be had if you are able to cash purchase with dealers.

Keep in mind for the Tucson (and I'd imagine Sorento) that there's a brand new generation coming so you should weigh whether you care about the new toys that will come w/ the new generation or okay with the "older" car.

The thread is correct you need to balance the final cost of 0% finance vs. cash purchase and see what ends up better for you in the end.
Deal Addict
Jul 7, 2009
1086 posts
604 upvotes
In general, I think used cars make more sense ... you don't pay for the big depreciation of a brand new car, insurance is cheaper ... but there are a few things to consider

- Do you need to finance the car? Usually new cars have much better finance rate, you need to run the math in both cases if you need to finance your used car and the extra interest you pay
- Do you plan to keep your car for 8, 9 years or longer? If you plan to drive your car into the ground, then there is minimal difference in how much it costs you between new and used
- If you do buy a used car, make the effort to do research and homework, stay away from cars that are high maintenance and / or have expensive parts
- Can you afford to buy a 'newer' used car? Like something that still has 6m to 1y left in comprehensive warranty? It will lower your risk significantly knowing any initial problems with the car will be taken care of by warranty
Deal Addict
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Apr 23, 2006
2987 posts
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Toronto
I think if you can get a good manufacturer incentive/rebate then it will offset the first year depreciation, not to mention lower finance rates.
Deal Expert
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Jan 27, 2006
18575 posts
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Woodbridge
Just go with whichever you like the best?

Numbers aside, I would never base my decision over specs, gas mileage, features, etc.
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THE NEWSROOM (HBO)
Member
May 24, 2012
260 posts
57 upvotes
Toronto
bembol wrote: Just go with whichever you like the best?

Numbers aside, I would never base my decision over specs, gas mileage, features, etc.
Just curious, what do you base your decision on?
Deal Addict
User avatar
Oct 16, 2007
1295 posts
537 upvotes
0% is a bait and switch with kia/hyundai. If you pay cash, there is a discounted price (not applicable to lease or finance). Instead of charging you an interest rate, they are recovering that profit by sticking with the MSRP price. Review what kind of interest rate you would get from other means (loan/HELOC/etc) and compare it to the cash discount amount.

also with that kind of budget I would lean towards a 1-2yr old CX-5. the tuscan/setlos just seem too small to be useful.
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Deal Addict
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Aug 2, 2007
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Springfield
ziaa wrote: also with that kind of budget I would lean towards a 1-2yr old CX-5. the tuscan/setlos just seem too small to be useful.
Both are in the same class, but the Tucson is slightly bigger than the CX-5. You might be thinking of the Venue.
Deal Guru
User avatar
Mar 31, 2008
11637 posts
2141 upvotes
Toronto
Dynatos wrote: I'm sure the debate has happened a lot on RFD, but I never buy new. It depreciates so much as soon as you drive it off the lot.

Research some reliable makes, models, and years and then shop the used market. Look for something in a private sale that was gently used with low mileage, particularly if you have the liquidity to buy in cash. Take it for a test drive and decide if it's in good enough quality to pursue. If it's in good shape, take it to a mechanic you trust to do an honest, detailed pre-purchase inspection for a couple hundred dollars. Then make an offer and negotiate a price.

My last two cars were purchased this way. Both were driven by elderly couples who primarily used them for errands.

2009 - I bought a 2004 Honda Civic SE with <50,000 km for $8k. I sold it in 2019, after 10 years and adding over 200,000 km to it for, $2500. In the 10 years I had it, putting 60km round trip on it daily commuting to work, it was mostly just routine maintenance (and sadly that included 2 damned fan belt changes).

2018 - Bought a 2013 Toyota Corolla LE, with all of the upgrades available to that year. 70,000 km for $12k. 2011-2014 Corollas at dealerships, with more miles and fewer options, started at $13k +tax. It was driven by an older gentleman who replaces his car every 5 years when he's done paying for it. I took it to a mechanic I trust and the only thing that needed changing was the tires (which I already knew). It's so far required 0 maintenance beyond routine.

Not to spark the debate or anything, but vehicles are a liability. If you have the cash, don't finance them, and I advise against buying new. If financing is your only option, though, do as others have suggested and see if you can get a lower interest bank loan. Debt is cheap right now.
This is my method too. So many out there. Just have to be a bit patient, and determine who's who. I bought my 08 Rav4 3 years ago that way. They had full dealer records, and during their safety, they also did a maintenance check and everything was green. I've just changed the brakes my self.

The other issue right now though is used 'car' market is a goldmine because nobody wants em anymore. Used 'SUV' is more pricey and varying.

Does make me wonder how recently used cars with higher prices compete with new cars with better financing rates. The reason OP is the business model for securitization of new cars is completely different than used cars. Thus better market liquidity and hence lower rates.

To summarize, investors (this includes pension funds, insurance and all sorts of institutional investors) putting money into something similar to a mutual fund which is used to provide the loan for consumers (like you) where the new car is collateral. Collateral is extremely important. New cars are new hence they market value is highly known and depreciation rate is well known. It's not been into an accident, etc.

Try convincing investors to do that with used cars. There would be way too much inconsistency and unknowns with prior ownership history and what it went through, thus higher risk. This means investors either will want a higher return on their investment or avoid that asset class all together. Hence lower liquidity profile = higher rates.
Deal Addict
Oct 24, 2010
1354 posts
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Ottawa
at1212b wrote: This is my method too.
I should also mention - get a CarFax report. They're pretty cheap for peace of mind on whether it's had any insurance claims.

But take it with a grain of salt. When we purchased the Corolla, the previous owner was completely honest with us that there had been a hail damage claim on the trunk, but it didn't show up in the CarFax report and you definitely can't tell anything was done. If it was in an accident and not properly reported as such, a good mechanic will be able to tell if there's anything wrong with the frame and can often tell if there's been any significant bodywork.
[OP]
Jr. Member
User avatar
Jul 17, 2014
104 posts
34 upvotes
Canada
I found this online calculator : https://www.scotiabank.com/ca/en/person ... lator.html

Recent (2017 to 2019) used SUV in the range of 25K to 30K cost you around 7K interest minimum (5.99% rate). At this cost, one might as well buy new right?

I read that people can buy leased cars and they're just like new? Are there any websites that sell leased cars? They are used, but at least they are well maintained
Deal Expert
User avatar
Jul 22, 2006
22071 posts
2748 upvotes
Cash and get a used car

If not cash go find a 0% interest deal and negotiate the OTR price like your life depends on it

Financing a used car @ 4.99%+ doesn't make sense to me
Sr. Member
Oct 21, 2006
597 posts
357 upvotes
it may be cheaper to borrow against your house, home line of credit is like 3-4% vs. 6-7% at used car dealerships.

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