New or Used Car: Which Is The Best Option Financially? | Refresh Financial
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New or Used Car: Which Is The Best Option Financially?

carIf you’re in the market for a car, you’ve probably found yourself wondering the same question we all do: which is better? A new car or a used car? Which is going to cost the least in the long run?

The traditional thinking here is that buying a used car that has low mileage and is only a couple of years old is going to be your best bet. You avoid the first couple of years of severe depreciation, your insurance will cost less, and you still get the benefit of a relatively new car, avoiding excessive repair costs.

But wait, remember just a couple of months ago when we told you about the incentives for buying a new zero-emission or low-emission car? To take advantage of these hefty incentives, you have to buy new. In some cases, you get as much as $12,000 back if you trade in your old clunker for a zero-emission vehicle. This shaves quite a large amount off the total price you’re going to pay for a car over its entire life, even with the depreciation taken into account. What’s more, you’re going to save a whole pile of cash on gas.

The downside, of course, to buying new even with all of these incentives, is that you’re likely going to have to finance the vehicle. This means you’ll need a good enough credit score, or a cosigner to be able to take advantage of the incentives for buying a zero-emission vehicle. You’re also going to be paying interest on your purchase which offsets the incentives slightly.

If you live in a province with incentives for buying lower or zero-emission cars, your best option is, by far, to buy the new car with a smaller carbon footprint. There are far too many financial benefits to ignore. If you are unable to finance a new car due to poor credit, there is always the option to be patient while you work on your credit score.

You can boost your credit one of three ways (or even a combination of these):

Secured Line of Credit

Your financial institution should be willing to help you rebuild your credit this way, but if they don’t, you can always combine the second and third options for a speedy credit boost.

Secured Credit Card

You do need some funds up front in order to secure your credit card but sometimes you can get away with as little as $300 and you’ll have a credit card in your name. Now, just make sure you pay it and all your other bills promptly, on time and more than the minimum payment and your credit will soar.

Credit Building Program

Not only does this not require any upfront funds, but it leaves you with a chunk of cash when you’re done which you can use as a down payment towards your new low-emission car. If you want more information about this option, just click here.

You have to make sure you can afford to buy a new car though, as once you put the rebates you get back onto your car loan, you’re still going to have monthly payments to fit into your budget until the car is paid off. If you can’t afford the monthly payments, then your best bet is just to buy a used car outright. Consider getting started with a credit building program to boost your budget for a used car, while you work on building your credit. That way, you’ll be able to purchase a “newer” used car that doesn’t have a ton of miles and won’t cost you a mint just to keep running.

What do you think the best option is? New or used? Let us know in the comments!

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I’ve done pay day loans in the past but didn’t know a whole lot about credit until recently. So I checked into my credit score. I was very disappointed to find that I had a 0 credit score as I have never had or needed any credit cards or lines of credit. I knew I wanted to buy the house I live in so I knew work was needed, but I never thought it would be as easy as purchasing REFRESH!!! I bought it in June of this year, waited or 2 months and was approved for my first credit card. I was so excited. It gets better!!! Then I waited 5 months, and would you believe it. Only 5 months after purchasing refresh my credit score was strong enough to finally get approved for my first brand new car with no down payment, low biweekly payments, no cosigner, and no car trade in. My bank also tells me if everything stays good I will own my home within a year. After years of thinking there was no hope I am only months away from owning my home. THANKS REFRESH!!!! Please share this story with everyone you can! ”

Emily, Truro, NS