When you’re buying a used car, there are many things to think about. For example, one of the main factors to consider when buying a used vehicle is the price. Whether you wish to keep costs as low as possible or simply want to make sure you’re getting your used car for a competitive price, continue reading to learn more about used car prices in Canada.
Determining the value of a used car
Determining the price of a used car is simple. You simply ask the dealership or seller how much they are selling the car for. However, determining the value of a used car is something else entirely.
The reality is that not all sellers appropriately price their vehicles, and whether you're buying from a dealer or an independent seller, there might be some wiggle room. In other words, you might be able to negotiate the price, but you can’t do that unless you have facts to back up why you think the car is worth less than they are selling it for.
The way to estimate a used car’s value is to do your research. Part of this involves independent research, and the internet is a great place to start. Not only could you look to automotive communities online, such as forums and Facebook groups, but we also recommend taking advantage of online car valuation tools. For example, Carfax has a car estimation tool that gives users a high value, low value, and average value for a vehicle based on the information they enter.
For a professional opinion on what a car is worth, you may also wish to consider hiring an appraiser to assess the car for you. On top of this independent research, you should also ask the seller for as much information as possible about the car, such as its accident history, history of modifications, history of service appointments, mileage, and more. All of these factors, among others, will impact its value. Once you can determine the value of your used car, you can confirm whether you are getting it for a fair price or not.
Trade-in value and resale value are not one and the same
It is worth noting that trade-in value and resale value are not the same. Thus, when you’re buying a used car, you will primarily want to concern yourself with the resale value, unless you’re trading your existing car in, of course.
Resale value is the value of the vehicle in the retail marketplace, i.e. how much money a seller or dealership would get for it. Meanwhile, a car’s trade-in value is the amount of money that you can expect to get from a dealer if you trade it in, which can then be put toward the purchase of your next vehicle. Generally speaking, trade-in values are lower than resale values.
Depreciation and car value
Let’s face it - cars depreciate quickly. In fact, they are one of the fastest products on the market to depreciate. However, one huge advantage you have when buying a used car is that the bulk of its value will have already been lost by the time you buy it, which means the difference between the price you pay for it and the price you eventually sell it for is likely to be less.
Ultimately, depreciation is one of the main benefits of buying a used vehicle over a new one, because even a vehicle that’s just one year old will be worth far less than a brand-new one.
Use these car valuation tools to determine the value of your used car
If you are ready to determine the value of your used car, be sure to take advantage of the many car valuation tools that can be found online. These tools allow you to input important information about your used car, and from there, they will provide you with an estimate as to how much the car is worth based on a wide range of factors:
Canadian Black Book and Kelley Blue Book
Canadian Black Book and Kelley Blue Book both started out as periodicals where annual vehicle valuations would be published and distributed to dealerships all over Canada.
However, nowadays, they offer their quality valuations online. Visit their websites to take advantage of Canadian Black Book’s Value Your Vehicle tool and Kelley Blue Book’s Car Value tool.
Carfax Canada
Carfax Canada is another go-to resource for many drivers looking to find the worth of a car. Carfax’s Canada Value Range tool allows users to input information like the maintenance, weather damage, and accident history of a car before providing them with an estimate to help them determine its value.
Carfax can also give you detailed information on the specific vehicle you are looking at, by inputting the vehicle indentification number it can tell you whether or not the vehicle has any unfixed recalls and more. Carfax Canada also gives you the average selling price of similar cars near you.
AutoTrader.ca
Finally, AutoTrader.ca has a car valuation tool that you can take advantage of, whether you’re looking to buy a used car outright or trade in. You might find it helpful to search AutoTrader.ca ’s directory of used cars, as each listing offers an opinion on whether the sale price is above or below the fair market value, which can give you more insight into the value of a particular model.
Considerations when looking for a cheap used car
If your goal is to purchase a used car on a budget, we’ve compiled a list of tips to help you keep costs down:
1. Pay attention to interest rates
Although used cars will almost always appear cheaper at first glance because their sticker prices are usually lower, there is something to be aware of if you’re financing your car: high interest rates. Interest rates on used cars are typically much higher than on new cars.
If you see a car advertised with interest rates between 0% and 4.99%, chances are your used car won’t qualify. Instead, the interest rates will be much higher. These high rates must be factored into the overall price of the used car. To avoid these high interest rates, your best course of action is to pay with cash, if feasible.
2. Pay cash if you can afford to do so
As mentioned above, interest rates on used cars are high, and the best way to avoid them is by paying cash. If you can afford to buy a used car with cash, we strongly recommend doing so, but only if you can afford it. You do not want to put yourself in a strained financial position by spending too much on a used car. If you cannot afford to buy a vehicle with cash, take out a pre-owned car loan and make payments on that.
It is worth noting that obtaining a car loan might be more difficult if you buy your used car through a private seller. It also might come with higher interest rates. Do your research in advance to determine what your loan options are and which lenders offer the best rates.
3. Consider taking out a loan from a dealership
To make your used car more affordable, consider taking out a loan from a car dealership. Many buyers are surprised to learn that car dealerships often have excellent loan options. Since used cars are typically a huge part of a dealership’s business, they gain access to some of the best interest rates and loan terms from lenders.
Plus, taking out a loan from a dealership might be more convenient, as they can take care of a lot of the paperwork for you, and financing can even be done in as little as a day. Also, when you buy through a dealer, you can ask them questions about the safest car brands in Canada, as well as the most reliable car brands in Canada, to ensure you make the best possible choice for your needs.
Where to find a used car
Once you’ve decided to bite the bullet and purchase a used car, you will need to see what’s out there. Whether you’re looking for one of the safest SUVs in Canada or want to find a used minivan or sedan, there are lots of places to start your search. We provide a list of some of the most common places to buy used cars in Canada below:
AutoTrader.ca
AutoTrader.ca is by far one of the most popular places to buy used cars in Canada. Across the country, AutoTrader typically has over 500,000 listings at any given time. This means that you will likely have plenty of options to choose from. While the website’s massive inventory is a huge plus, one of the downsides of AutoTrader.ca is that it doesn’t offer financing. You also run the risk of a seller not honouring the price the vehicle is advertised for on the website, although you run that risk with any online used car website.
Facebook Marketplace
Facebook Marketplace has become a popular spot to buy practically anything you can think of - from clothing and furniture to decor and even used cars! Facebook Marketplace has become increasingly popular over the years and now has a solid inventory of used cars nationwide.
While it’s not as user-friendly as other websites that are solely dedicated to used car sales, it can still be a valuable place to look.
Kijiji
Kijiji is one of the top classifieds websites in Canada, so it’s no wonder that you can find used cars for sale here. Like Facebook Marketplace, tons of different products are sold on Kijiji, and it's still relatively easy to search for the used car you want by keying in the model name or other details.
As with any public classifieds site, including Facebook, always beware of scammers and make sure that the price being offered is actually the price that the buyer is selling it for.
Used car dealerships
Used car dealerships are another popular place to buy a used car. Many see dealerships as a more reliable place to purchase a used car as they have an obligation to provide accurate information about the cars they sell. They are also accountable for them should something go wrong.
Further, used cars sold by dealerships are inspected and serviced by professionals. All of this gives motorists peace of mind, which is why many choose to buy used cars from dealerships instead of from independent sellers.
The one drawback of buying a used car from a dealership is that some dealers will not approve you if you have a low credit score. Buying from a dealership might also mean paying dealership fees.
Canada Drives
Canada Drives is another online used car retailer that can be used by customers looking to buy used cars. Canada Drives offers a massive inventory with hundreds of used cars and has an easy-to-use website. They also offer Carfax history reports with each used car and can help customers obtain financing. They also offer vehicle delivery to your front door.
Car insurance for used cars in Canada
When buying a used car in Canada, there is another cost to consider beyond the price tag of the car, and that is the cost of car insurance. There are many types of auto insurance out there, and you will need to decide which ones are right for you after buying a used car.
Although you will need to make sure that your coverage meets the minimum requirements in your province, there are other optional coverages that may be worth considering, such as comprehensive coverage, collision coverage, and accident forgiveness coverage. One mistake to avoid when buying insurance is forgetting to buy the extra protection that you might be obligated to purchase according to the terms of your lease or financing agreement.
For help purchasing car insurance anywhere in Canada, contact BrokerLink today. We work with insurance companies in Canada to help you find the best possible rate for your used cars. We will obtain insurance quotes and compare them to ensure you get the most competitive rate for your policy. We can also explain how car insurance discounts work and give you advice on how you can qualify for them.
Ultimately, if you need help with any part of the car insurance buying process, you can count on BrokerLink.
How to save money on car insurance coverage in Canada
If your goal is to keep the price of your used car down, then one way to do so is by lowering your insurance costs. No matter what type of car you buy, you will need to purchase auto insurance coverage. This means that if you can reduce your premium, you can bring down the overall cost of car ownership. Below, the BrokerLink team outlines a few ways to save money on car insurance in Canada:
Increase your deductible
The higher your deductible, the lower your premium will be. So, if you want to reduce how much your used car insurance policy costs, consider selecting a higher deductible. For instance, choosing a $1,000 or $2,000 deductible instead of a $500 deductible can go a long way in minimizing your rates.
Bundle home and auto policies
Bundling policies is another way of saving money on car insurance. Many insurance companies offer insurance bundles, and if you buy one, you can save money on multiple types of policies.
The most common types of insurance bundles are home and auto bundles, which means buying a home insurance policy and a car insurance policy at the same time. That said, you might also be able to bundle a car insurance plan and a recreational vehicle insurance plan. You can even buy more than one car insurance policy and save.
Install winter tires on your used car
Installing winter tires on your used car can lead to car insurance savings in certain provinces. Since winter tires make your car much safer to drive on snow or ice, an insurance company mayoffer you a discount if you can prove that you have winter tires on your car.
There are usually a few conditions you must meet, like having the tires installed by a certain date each year or making sure all four tires are the same model, but so long as you meet them, you can receive a discount.
Spend less time on the road
Spending less time on the road is another way to minimize your rates. If you only intend to drive your used car on weekends or a few times a week, let your insurance broker know. Depending on how low your annual mileage is, you might qualify for cheaper rates. Calculate mileage before speaking with a broker so that you have an idea of how many miles you drive each year.
Attend an approved driving school in your province
A great way for drivers, especially young drivers, to save money on car insurance is by attending an approved driving school in their province. Driving schools are accredited institutions that teach new or young drivers the rules of the road. If you can show proof that you graduated from a recognized school in your province, your insurer might give you a discount.
Become a better driver
The safer you drive, the better your rates will be. Why? Your driving record matters. It’s one of the most important factors an insurance company uses to determine your rates. As you can probably guess, accidents affect car insurance rates greatly, so if you get into an at-fault accident or have another type of infraction on your record, such as a speeding ticket, you will be seen as a riskier driver, and your rates will likely be higher.
Alternatively, if your record is clean of all infractions, you will be considered a low-risk driver, and your premium will be lower.
Contact BrokerLink for your car insurance
Whether you need help determining the value of a vehicle, finding a cheap used car, or saving money on car insurance, BrokerLink is here. As automotive insurance experts, we can explain how the world of car insurance works. For instance, if you want to know what documents you need for car insurance, we can tell you! Further, whether you’re buying car insurance in Toronto, Calgary, or Halifax, we can ensure you understand the minimum coverage requirements in each province.
Plus, as one of the leading insurance brokerages in Canada, BrokerLink is pleased to offer free insurance quotes to all customers. These quotes are accurate, reliable, and obligation-free. They can also be obtained in whatever way you like - give us a call, visit us in person at one of BrokerLink’s locations across Canada, or use the online quote tool on our website to receive your quote in a matter of minutes.
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