Used car prices are still on the rise in Canada, driven by strong demand and an ongoing trade war with the U.S.
“Used car prices have gone up dramatically over the past two years and it’s not just the price of the vehicle, it’s also the added cost of products, services and add-ons,” said Shari Prymak of Car Help Canada.
According to AutoTrader.ca, the average cost of a new car in Canada is over $66,000, leading more shoppers to turn to the used car market.
“I saved about $30,000 (buying used) and with that money, I got to put it towards the vehicle, and I had money left over for other needs,” Ali Shahsamand told CTV News.
Owning a car—used or new—is expensive when you consider monthly payments, insurance, maintenance, repairs, and fuel.
Plus, with the used car market currently tighter than usual, used vehicle prices remain higher.
“When there aren’t many cars available, but lots of people are looking, prices go up. It’s supply and demand. So, buyers need to be strategic in order to find that good deal,” said Keith Barry with Consumer Reports.
Along with paying more for a used car, buyers could face added pressure from some dealers to pay for expensive add-ons.
“That’s because many of the add-ons and services are very high profit and, in many cases, they make more money on the add-ons than the vehicle itself,” said Prymak.
When signing a contract to purchase a used vehicle, buyers could be also get pitched warranty plans, GAP insurance, paint and interior protection, rust proofing, VIN etching, tire and rim protection, and anti-theft devices.
“Sometimes the dealership products are not only not very good, but they can also offer next to no value,” advised Prymak.
Prymak also recommends that before going to a dealer, try to get pre-approved for a loan at a bank and check your credit score. If you agree to a higher interest rate loan, the financing could add thousands to the cost of the car.
“With newer cars, you can find interest rates anywhere from two to five per cent, whereas used cars typically have loan interest rates of seven to 10 per cent, so that really eats away at any savings you may have for the price of the car itself,” said Prymak.
He advises to research to find a vehicle that’s safe, fuel efficient and dependable. Consumer Reports gave high marks to the 2019 Toyota Corolla, 2018 Mazda CX-5, and the 2019 Toyota Camry Hybrid.
It’s also recommended to get a Carfax vehicle history report and a used vehicle information package from Service Ontario.
There is no “cooling off period” in Ontario when buying a car, so don’t sign a contract unless you’re positive you want the vehicle.
