Should you buy a new or used car?

I love driving. I find it relaxing to get behind the wheel and drive to a specific destination…as long as there is not a ton of stop-and-go traffic. Fortunately, I've lived more recently in places where traffic is not much of a problem.

Driving in Toronto or New York City drives me nuts. But driving in Nova Scotia or Portgual is really enjoyable.

So let's get into the best way to decide if you should buy a new or used car.

Reliability

A new car is reliable. You know you won't run into major problems and you can enjoy the feel of a new car. Not having to worry about potential issues (like a $3k catalytic converter replacement I had to make on my old Volvo CX-90) is a wonderful benefit.

New Features

I love all the new perks. Features are fun, and the newer cars have more of them. Some of them like Airplay can become must-haves.

But there are some drawbacks to a new car.

For me, Apple Carplay is a must-have. So that limits the older models that might not have that feature.

Cost

New cars cost more. You're paying a premium for any new car. The fact that nobody else has driven the car boosts the price. Keep in mind that a newish car with an excellent detailing job could be very similar.

Value

New cars value drops when they leave the lot. It's like buying crypto at the peak and holding it through a 20% drop. You may be ok with that knowing the price will recover, but you are underwater – and may be for a few years.

Used cars have a wide range – they could be old beaters that are clinging on for dear life, or they could be 3-4 years old and be in may ways indisgunishable from a new car.

So know what you are getting into.

Risk

There is more risk when buying a used car. You don't know the condition of the car, and you don't know how carefully the owner took care of it unless you are a mechanic or an expert in cars. This can make you feel more uncomfortable even after the purchase. In my experience, cars are usually well-aligned with what you pay for them.

I've bought brand new cars, like my Honda CRV and my Volkswagen Tiguan. And I have bought well-aged cars, like the Volvo CX-90 with 180,000 km on it and an old standard driveshaft red Isuzu Trooper that I bought without knowing how to drive a standard.

I've also bought a 4-year-old BMW at auction through a car dealer – and that was a fun car to drive and unfortunately got me a couple of speeding tickets because it was easy to go so fast.

Availability

Currently, due to the economy and tightening pocketbooks, the prices of used cars are soaring, and many locations don't even have rental cars. It's an interesting time right now, but you have to consider the fact that the supply and demand might be working for you or against you.

Final Advice

My advice is to weigh your risk level with the cost of the car. Remember that each dollar you commit to a car loan is locked in for a period of up to several years. If you can, keep the term lower so that you can eventually own your car and pay less in real-cost for your vehicle.

Play with the numbers on a car calculator and know what you can afford before negotiating or deciding.

And consider driving some different cars. You may find that a lower-end car might be quite enjoyable to drive and allow you to save a whole lot more money for your crypto investments.