Used versus new car, i bought new and why you should too

I bought a new car versus used, why you should too!

…. Buying a car, the age old debate of new versus used!

By MeTheMillennial

So I bought a new car!

I know, it goes against every rule in the FIRE (financial independence, retire early) book, and against every GURU out there…. I’m hearing Dave Ramsey yell in my right ear right about now.

But after putting in the time to research the options available to the average person. I am going to tell you why it actually makes more sense to buy NEW versus USED.

…well in my case anyhow!

You’ve thought about it, and just like me you’ve ruled out walking, cycling, Ubers/Lyfts, short term car rentals and even borrowing from the house of Mom and Dad.

None of this worked for me, having recently moved to Vancouver and in order to explore the vastness of the pacific west coast and the amazing weekend hiking spots just a couple of hours away. 

I decided that getting a car of my own was a must.

I’m at the ripe old age of 31, and although I was saving a lot more from cycling/walking wherever I could. It was just becoming impractical.

Between getting to work, rugby training, exploring and just generally getting around. 

A car made so much sense.

So, my slightly obsessive personality kicked in and I began researching everything I could find related to the pro’s and con’s of getting a car, whether that be new, used or won in the lottery – all options were on the table.

What are your options for getting a car?

If you’re considering the same, generally your options are to;

1) buy new, 

2) buy used, or 

3) lease new. 

So, clearly I made the decision to go with option 1. 

But why? 

According to most experts out there, buying new is a terrible idea – and some of this actually makes a lot of sense – I subscribed to this view point my whole life. Check out Ramsey’s reasoning for why you should never buy new. 

There are so many costs you are hit with – such as depreciation, petrol, maintenance, insurance, financing… the list goes on.

Depreciation is always touted as the big reason for why not to buy a new car. Typically the consensus was that a car depreciates by about 20% in the first year – according to Drivenation.

However, not everyone is treated equal… or car brands in this situation.

Not all cars depreciate the same amount every year.

Some brands are actually known to hold their value incredibly well.

When you add this in with new car incentives and low financing rates, it can actually be more cost effective to buy NEW versus USED. 

“Value” Car Brands to Consider 

So which magic brands are they?

According to US News World Report, the best SUV’s and Minivans that stand up to the test of time in 2022 along with best value for money are:

  • 2-row SUV: Hyundai Santa Fe
  • 3-row SUV: Kia Telluride
  • Subcompact SUV: Hyundai Kona
  • Compact SUV: Hyundai Tucson
  • Minivan: Honda Odyssey
  • Hybrid and Electric SUV: Hyundai Tucson Hybrid

And the best cars that stand up to the test of time in 2022 are:

  • Subcompact car: Nissan Versa
  • Compact car: Honda Civic (a worthy close second was a Mazda 3 and the car I chose to buy new)
  • Midsize car: Honda Accord
  • Large car: Toyota Avalon Hybrid
  • Hybrid and Electric Car: Hyundai Elantra Hybrid

These cars and a couple more are what you should be looking at if looking to buy new. Because they have held their value over time.

They came up with this list by more than just the price tag, but also taking into account ongoing costs, like repairs, fuel and insurance to come up with a value rating. This is viewed on a 5 year total ownership time horizon. So not just the price you negotiate at the dealership.

Why everyone loves NEW

Buying new has several pro’s that suck you in, it worked on me, they include:

– Personalization is easier: All new cars are factory produced perfection and you get to personalize as you see fit, from the make/model, the trim, the options, color..the list goes on. Whatever you want, you can get with a new car.

– You sleep easier: Most new cars come with pretty awesome warranties, mine came with a 5 year warranty included along with many other perks like free 3 year breakdown assistance. Also, new cars are just generally more reliable than older cars, you get to take care of it and service it correctly and timely.

– Financing is cheaper: Car makers offer so many incentives to get you to bite, from cash rebates to ultra low interest rates. In my cash I got a 1% interest rate, which is beating current inflation by 7%. That means my monthly payments get cheaper and cheaper every month. 

– Tech features: New cars have the latest tech, whether that be Apple car play, surround sound speakers or an actual heads up display, new cars have all the latest features. I would have been just happy with Apple CarPlay, it really is a game changer for me!

– Keeping up with the Joneses: Let’s just say, that new car smell will add a bit of pep to your morning step.

But hold on….on the other hand, you get whacked in the first year of depreciation as much as 20-25% in the first year. 

Or do you?

The Results: New versus Used 

I decided to test the long held theory that used is always a better decision.

Everyone knows about the ongoing supply chain problems in the world, and the crazy inflation histeria the world is occupied by.

Cars are bang smack in the middle of these problems.

According to CNBC used cars increased by 3.5% in December. That’s right, in just one month!

In fact according to Cox Automotive reports the average retail price for a used vehicle was a new record of more than $28,000 USD in December.

So used car prices are going up and up. 

Knowing this I decided to shop around for a NEW compact car. 

I came up with my favourite – the brand new Mazda 3 (not the hatchback version).

Side Bar – see below my pride and joy. A month later I am still shocked and excited by the feeling of buying something new like this. A scary decision but looking back, absolutely not regrets.

After a few days of searching I found a truly awesome deal online.

A Brand new Mazda 3, in my favorite color Jet Black Mica at an all in financing cost of $27,200 CAD (including tax). This included putting $7k down in cash.

Okay great, that seemed like such a great deal – the best I’d found.

But how much would it depreciate by if i was to sell it in say 3 years time?

Well to my absolute shock, when I went on to many of the used car sites like Auto-trader and Canada Drives.

I found the same make / model for a price that was more than I would pay for the brand new version.

There was even a 2018 version with 22,000 km on it for $28,500 CAD. A 4 year old version was selling for more than the brand new version!

I thought I had one too many pints of Guinness last night and I was hallucinating, so I kept searching and looked at other models on this list I gave earlier – like the Honda Civic,

Again and again I found the same trend, used cars  2 – 4 years old were selling at the same price if not more than the new version.

If you don’t believe me, check it out yourself – call up a dealer or go online and look for new cars on the list I gave and compare them to cars 2 to 3 years old – even sometimes with the same dealership!

After I bought the car, I asked the car salesman at the dealership about this – he said that there is such a shortage at the moment of cars and such high demand that he has seen this so many times recently. 

He noted all of his new cars were sold out for 2022. So people are catching on.

Once you pick your car, make sure to haggle on the financing rate. I got a financing rate as low as 1%. 

This is essentially like borrowing for free, and means my payments will get cheaper every month due to inflation. Don’t go with any extra coverage, the finance manager will try and offer you everything under the sun. 

Politely say no and move on.

Also protip – ask your dealership to waive the documentation fee, I saved $500 dollars from this alone. 

If you want more details around the full cost of ownership for new cars check out, they have  a great online tool for estimating the full cost of owning vehicles for 5 years which includes maintenance, repairs, taxes & fees, financing, depreciation and fuel. And its free!

My pride and joy

I Disregarded Leasing a New Car Immediately

Leasing imposed a maximum number of miles I was allowed to drive every year. Which I really didn’t want to worry about when exploring Vancouver and British Columbia.

Also the interest rates you pay ten to be a lot higher.

And you don’t actually own the car. 

I won’t go into detail as its well publicized that leasing a new car is never a good option – CNBC and Suzie Orman sum it up well.


Okay, as you know I’m an ex Consultant so I have to leave just a few caveats. before finishing.

This approach to buying a new car versus used really only works for competitively priced new cars, like the ones I listed above. Meaning, cars which already give you the best value for money.

This wouldn’t apply if you’re buying a high end Porsche or BMW. So make sure to keep this in mind.

Also, my plan is to sell the car in 2.5 years time while it’s still under warranty with a maximum 30,000 to 40,000 km on it – this, based on current prices should actually result in making a profit on it. This is assuming inflation continues and supply chain issues aren’t immediately solved, which I don’t see anytime soon.

The Bottom Line

Reems and reems of articles are out in the ether showcasing how bad a financial mistake it is to buy a new car.

But in 2022, this is not actually the case anymore for certain car models and makes.

If you are smart there is potential for you to actually make a profit and sell a brand new car you purchased for more than you paid for it a few years down the line. While enjoying all the benefits that come with a new car, breathe in that new car smell.

Plus this may even further accelerate my journey to financial independence – who knows I could even take on a side hustle like Uber eats!

..and also life is to be enjoyed. What’s the point in saving so hard if you aren’t going to splurge every now and again with something you can get endless enjoyment from.

You deserve it!

As always, follow along on my journey and subscribe to my newsletter and never miss a post. It really helps me out when you subscribe.

Appreciate you making it to the end!

Let me know in the comments your thoughts on the New versus Used argument!

Have an awesome weekend. 


2 thoughts on “Used versus new car, i bought new and why you should too”

  1. Very interesting article – I was recently in a similar position and decided to take the plunge and buy a new car too. Reading your perspective helps me know I made the right decision.

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