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

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

Posted on January 27, 2023

When will you purchase your next vehicle? Even though you may have everything chosen—the ideal colour, all the accessories you need, and a design you adore—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, so it's a trickier topic than you may imagine. 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 because they prefer it when cars are purchased outright because they make their entire profit at once and don't have to 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 once you drive it off the lot.

This may be the best method to buy a new automobile in an ideal world, but it's also the most unrealistic because very few people have $20,000 to $40,000 available to spend all 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, which involves signing a contract and committing to making monthly payments over a certain 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 entire balance of the outstanding loan.

The advantage is that you don't have to wait years to save up the money to buy the car, which is a huge plus in the grand scheme of things.

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, where 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 automobile because you must adhere to restrictions on things like mileage, but the monthly payments will be significantly less expensive than financing and you'll probably obtain an even finer car.

As you can see, there is no one optimal way to purchase a new automobile in Canada, even though financing is undoubtedly 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!

If you're ready for a car loan in Southern Ontario, we'd love to help! simply fill in the form below to get started.