The Best Way to Buy a New Car in Canada: 3 Excellent Choices

What is the best way to buy a new car? Even though you may have everything chosen there is still one last thing to consider: how you will pay for it. There are various ways to pay for a car, and each has benefits and drawbacks.

 

Let's figure out the best way to buy a car for your situation.

 

 

Method 1: Cash

Let's start with the most straightforward but least used strategy: paying cash up front for the vehicle. Economically, this is the best way to buy anything, not just cars.

 

However, when it comes to cars specifically, dealerships will frequently give a cash discount. Dealerships prefer it when cars are purchased outright because they make their entire profit at once and don't split it with a lender.

 

This is true for you as well because if you pay cash, you immediately become the owner of the vehicle.

 

This may be the best method to buy a new vehicle, but it's also the most unrealistic because very few people have $20,000 to $40,000 available to spend at once. This is why it's the least popular way to buy a car.

 

Method 2: Financing

The most popular way to purchase a car is through financing. This involves signing a contract and committing to monthly payments length of time to pay off the car's worth plus interest.

 

Due to interest, which is a fee added to the loan amount, this is more expensive than paying in cash. Additionally, it implies that until the loan is completely repaid, you do not possess full ownership of the vehicle.

 

As a result, if you ever decide to sell or trade in the vehicle, you must first pay off the balance of the loan.

 

The advantage is that you don't have to wait years to save up the money.

 

Method 3: Leasing

The last option to think about is a little bit of a wild card; a lease can be viewed as more of an extended rental.  You pay a monthly cost to drive the car and have the chance to buy it outright at the end of the term.

 

It is far more constricting than simply purchasing the vehicle because you must adhere to restrictions.  These include things like mileage, but the monthly payments will be significantly less expensive than financing.

 

As you can see, there is no one optimal way to purchase a new vehicle in Canada, even though financing is the most popular option. In an ideal world, purchasing a car outright would be the greatest course of action.

 

However, your needs wants, and general financial status actually determine this!