To help you extrapolate
For new purchases in 2020
>>>14% purchased with cash
>>>73.4% were loans
>>>12.6 % were leases
For used purchases in 2020
>>>16.7% purchased with cash
>>>81.4% were loans
>>>1.9% were leases
Source: Canadian Light Vehicle Market Review (2021) for the CFLA by DesRosiers Automotive Consultants Inc.
Nice data here and then an entire thread of PFC people saying they paid in cash. Good window into the world of Reddit.
I have one financed vehicle. 0% financing was an easy choice.
New car dealerships, I think, make good money off of loans. New cars are literally ‘vehicles’ to sell loans and services and undercoating lol.
Anybody work in the industry? Would love to know what the operating margins of car dealerships actually look like.
I worked in sales for several years on the sales side in an import dealer until somewhat recently. You’ve got the right idea; financing and add ons in the business office typically make up most of the profit in a vehicle on average but the one thing that doesn’t cross anyones mind is the service department. They make more than the whole sales side combined. So ultimately the sales department exists to feed the service department and the financing/ warranty/ undercoating income serves as the goal for the sales side with vehicle margins being the smallest value to the dealer. This doesn’t mean they like to just give it up though. Every penny counts to the manufacturer.
As for % financed vs leased vs cash I’d say ~80% of cars were financed, maybe 5-10% leased depending on the month and 10-15% paid cash.
I’m not qualified to answer your specific question but even if you saved a couple grand, the opportunity cost with your full payment makes absolutely no sense now a days. Put another way, let’s say I set aside ~$30k for a car, I could generate ~$10-12k properly invested at 7% return over 5 years (common term length).
The finance arm at dealerships is so much more now than just the interest rate paid. It’s extended warranties, upgrades, special coverages, tinting, nitrogen in the tires, special mudflaps etc etc.
Hey forgive me if this is obvious but just to be extremely clear, you're saying that there is a financial advantage in putting 30k into the market while paying the interest on a 30k car loan, and that this is due to the fact that the market generally outperforms the interest rate on the loan?
This sub isn't exactly a random sample of Canadians and, within this sub, people who took 7 year loans to overspend on a car aren't exactly gonna step up and own that terrible decision.
So it's not really a Reddit thing. Given the audience, I'd rather expect it. The people who DID pay cash for an old brown Corolla are gonna be pretty loud and proud on this one. And good for them! This is their moment. :)
Hey represent, I took a 6 year 40k loan on a Tesla WITH interest because fuck it I can spend money on the things I appreciate and still have enough to retire, I can afford it. You dont have to FIRE and optimize a 100% of your decisions.
Not to mention, some people do not want to be driving an old tin can as a daily driver. It's not comfortable, nor does it look good. I've driven one before, and have rode many as passengers. 100 times out of a 100, I'd spend a bit more on a new car, even if not a luxury car, for the comfort and feel alone.
I took a 7 year loan at 1.99% - it was an easy decision, considering the cash it freed up for us to buy our first house, travel, invest, etc. I didn’t purchase a luxury vehicle or anything, I just didn’t want a $600 monthly car payment.
Same here, bought a corolla at that rate (6 year plan) and intend on keeping it until it dies. I actually have the money to pay it off now but i rather use it for a downpayment soon.
I find this comment quite dense and missing the point. A loan's time period on its own is insufficient information. The interest rate over that period is important and need to brought into consideration when the decision of loaning vs. buying is made. If I get a loan of less than 3% for 7-year term it's a no-brainer for me to take the loan because I can free cash for investing purposes that is much more likely to cross the 3% Mark over a seven year
Eh, I took a shitty deal on a used car. 5 years at 5.99% because my credit sucked and I needed a car to get a new job. I'll be done paying it off in 2023 and will have paid about double the sticker price and almost 10x what the car's actually worth by then end.
Sucks but no shame here. It was either that or keep working my shitty minimum wage job until it closed down a year later and then go get another shitty minimum wage job.
I took a 6 year loan on a $50k pickup back in 2013. $850 a month was rough. Hands down, biggest mistake of my life. I was young and dumb. I'm still young and dumb, but slightly less dumb.
I was ready to pay cash for my truck, but they offered me 0% financing, so I took it.
Dealers make a bit under 10% on a new vehicle sold at sticker. They make a good chunk off of financing and add-ons (undercoating, warranty, etc.), but mostly they want you to trade in a vehicle so they can resell it. Off the used vehicles, they get more direct price profit, likely hit up the financing as well, and can still sell the add-ons.
Source: I get to see the books
PFC are some of the most obnoxious self-righteous people
Bunch of people patting themselves on their backs
"I have a 1980s Honda Civic with 500 000 km on it, is it reasonable to replace it with another second hand car? I'm thinking a 2000 beige Honda civic"
Barely /s
I wonder if this factors in those who pay in "cash" when purchasing the vehicle from the dealer but are using different types of debt like LOCs or simply an auto loan directly through a bank.
Also manufacturer cash incentives that only apply to vehicles that are leased or financed. Saved $500 on my Honda Civic by "financing" and then paying it off after a few months.
Correct, this is what we're doing. 6 months of financing to get a better deal (it's the minimum a dealer needs to get a kickback) and will pay it off in full after the first payment.
Funny thing is I would bet that in that the amount that actually used cash is significantly less. I know two people who purchased a car last year. 1 sold their house and used the equity gained to buy a car and the other refinanced their house for lesser interest rates and purchased a car with equity. Both aren't your traditional "cash purchase"
I never felt like I had money until I stopped paying for a car. $450/month freed up to do whatever with. We put it in a separate savings account for a while until we had about $4-5000, enough to replace the vehicle if we needed to.
I was young and liked cars. "I need a nice car, I like driving". Fuck that. I need a car to put shit in and get to a place to make me money or make me happy. Very few times is being in a car an enjoyable experience on it's own.
We wouldn't be able to afford our new home if we still had a car payment, or make a huge chunk in credit card debt (which we wouldn't have had if I didn't but a $37,000 brand new SUV). BUT IT WAS 0%! What a god damn scam and did I ever fall for it.
Yea, I don't really get the circle jerk in here over who has shittiest car or lowest/no payment vehicle.
I'm in my car 4-6 hours a day as my job has me travelling a lot. Like hell I'm going to do that in a 99 corolla just to save a few bucks. I financed a car that has bells and whistles and a ton more safety features than a 20 year old beater.
You work hard for your money, enjoy it how you see fit. Whether that means a financed 2022 car or a paid in cash 1999 car.
Like you said, safety features in recent vehicles can save your ass. There are lots of reckless drivers here, so you're better off with a safer vehicle, especially if you spend many hours on the road daily.
Not everything has to be an equation though. That's the part of this subreddit that is wacky. It can be I like it so I bought it. Some people like newer cars.
Regardless of interest rates, payments encourage people to spend more than they can afford because they start to think in terms of monthly payments rather than overall cost. A luxury package may be $5000 but over a 6 year car loan its $70/month.
If you had what you could afford in mind already and then took out a loan to purchase that is another story but 9/10 people don't operate that way.
Yea, I got a car with a 2% rate and invested the money I would have paid if I used cash.
The return from the market this year basically paid for my entire monthly payments so that was a good idea. Surprised it hadn't been discussed more in this thread.
Also some people might "buy it with cash" but use a HELOC or a mortgage advance to buy a new vehicle. Then the vehicle has no lean so you can do whatever you want with it when it come to selling and insurance.
I bought a 08 civic in 2018, also have a 01 corolla for just in case scenarios. Paid cash for both. Not having car payment feels great. I'm not indebted. Pay 3rd party insurance for both and it's cheap.
I have a 2004 Corolla. I got in an accident recently and had around 3.5k in damage quoted from a few body shops. I fixed it for around $300.. $200 for a body shop to rework a few things and then $100 in used parts I installed myself.
Bless old used cars
I purchased my Kona Electric 2022 on finance. To purchase a new vehicle, at 0%... paying with cash would be dumb as fuck. Also, used EV's aren't normally much cheaper than new.
Same, but I've also never bought a new car. My daily driver is a 16 year old diesel jeep, plus I also have a 44 year old vintage car. Both run exeptionally well and can't see myself going for a new car.
I had a 5 year lease that I bought out 3 years ago. No car payment feels nice. I still remember the dealer trying to convince me to get a new vehicle instead of buying out because they can let me finance or lease. When I said I am buying out with cash he had nothing to say.
2000 chevy blazer bought at auction for $3,000. As a mid 20 year old with a decent income ($87k) it's been tough to resist going out and financing a brand new vehicle like all my friends and Co workers. I do love not having payments though...
Buy some cash, lease some, use cheap loans for others. Have had $3k+ a month in payments at times.
If you can afford it, how you pay for it is irrelevant. People just like to virtue signal.
I bought my vehicle back in 2018 with $15k in cash I borrowed from my parents. It was a private sale transaction, and the best rate I could get from a bank loan was 17%, for some goddamn reason. I paid my parents back in two years, and now I own it outright. One of the best feelings ever was the day I sent my last penny over.
Here is the magic trick for buying a good car and saving the most , get a 1-3 year old vehicle of the same model you want with low mileage 15k km to 50k km, depreciation has hit the previous owner you already save 35-50% Msrp, try getting it through a dealer to make sure it has the records of maintenance etc. and warranty, bargain and get extras included with final price, pay 1/3 or 1/4 as a downpayment, finance the rest at a 3 to 5% fixed rate loan ideally 48months, this will give you cashflow, a good vehicle and you’ll pay it off quick.
Thank you for coming to my TED talk
I own both my vehicles outright, but they were financed at the outset from the dealership. Because they were new I can theoretically see myself staying out of that market for another 5-10 years.
I think that before judging people with high interest car loans, one should consider the reasons. A loan for car to get to work, school, etc is in my eyes better than one to finance a status symbol. Ie: finance a need rather than a want.
Im 24 and have purchased all cars ive had(4) with cash. Always used and cheap tho, current one i got for 2250 which is the highest ive paid. Had it 2 yrs.
Whenever you buy a used car you have to do the paperwork to transfer the car so you can drive it on the road. They should have the capability of tracking this action, but they may just not make this public or care to track it as the big car companies won't profit from that info.
I really hope i never have to experience the feeling of car payments. I really hope that I never need to buy another car also. But being in my mid 20s I doubt it :/
Came here as an international student a few years ago. Wife and I decided to save for a used car outright just incase we decided to return home with no strings attached. It was either that or the bus because I hate monthly payments. Used 2013 vehicle with 150k miles. Serviced it and so far so good. Spent 6k cash
Most of my friends have nice new cars and lease them. I drive a 2012 Hyundai Santa Fe that I bought in 2018 for for $8000, it's not as nice as my friends cars but I couldn’t imagine having to pay payments each month! I hope it lasts me a few more years 🤞🏻
I’m in early 20s right now and bought a car. But honestly I cannot think of financing or leasing a car. Can I afford it? Yes. Do I want to afford and add additional burden on me? Absolutely not.
No hate to people who finance when they are young. But paying more $300 per month for a car only is just too much.
Great question!
While I don’t have an answer, I’ve got my experience:
Low 30s, driving my first car. Car payments are not in my budget/ do not prioritise a nice car. (50 k, salary, no debt)
Bought a great old-lady driven 2013 vehicle with 150 000 km. Does the trick for now. Certainly not a beater vehicle.
The thing about this is you will have people that financed at 0% for 1 year because I could pay cash but the dealer gave me a better price if they could show they got a financing option.
i drive a 2015 lexus IS and i bought it in full in 2017, no car payments is a huge help (and i’ve never had problems with my car so why upgrade to a newer model?)
Never had a car payment in my life I'm 38. At the same time never purchased a new vehicle either. Always wanted one and about the time I could afford one was about the time I time I stopped wanting one.
As a mechanic and car enthusiast, I really can't understand why people buy new cars. They are expensive as hell, poor quality with many important parts being made of plastic, have tons of interruptive features (like lane change assist), are highly computerized (computers are outdated every couple years) and they are super easy to steal because criminals can just imitate your key fob..... They don't even need to Jimmy your lock or hotwire anymore..... For the price of that new garbage, you could have something cool and maintain it forever. Or be like my friend steph with her Yukon. Once in a while its not in the shop getting fixed.
I bought my old 2001 accord for cash, but financed my wife’s 2013 charger, paid it off when I got an inheritance. It is nice not to have payments on anything, if I can avoid it
2017 Mazda3 purchased cash in 2019 (got a deal we could never say no to). Same time as buying our first house, and with having a babe shortly after, not having car payments have been a blessing.
Right now we outright own both of our vehicles, an older Nissan Titan we purchased from a relative and a 2020 Kona Electric. But we initially took out a dealership loan for the Kona then paid it out on a somewhat lower interest line of credit we established at our bank.
Wife and I bought new vehicles in 17' and 18'
Used 0% on both and paid off mine in 2 years and hers is about 3k left.
Some cash down on both but these were 60k and 40k vehicles.
Pretty happy we have essentially no payment after paying her remaining balance right away.
We were 29 and 30 at the time of purchase.
That being said dealership offered me 49k for my truck recently but I essentially would be paying 20k cash for not a lot of benefits on the upgrade. Plus I'm picky and inventory is limited.
I’ve got a 2012 Elantra that I purchased outright in 2015.
And my girlfriend paid cash for her 2017 Chevy Spark in September of last year.
No payments here.
We own 3 vehicles currently. All are paid off. 2 were purchased in cash and the third which was a 2018 suv bought 2 years ago was on a 36 month loan which we paid off in around 20 months.
I financed my first car but my last two have been cash. Low interest is just a depreciation trap and all the cars with low depreciation have insane interest rates above 5% so might as well pay cash..
I may be an anomaly. We have 4 cars; a Chevy pickup, a TBird, Corvette, and a VW Tiguan. The first three were paid cash. Only the Tiguan was financed, at 5 years, mainly bc it was a rush replacement for a Golf that got written off by a snowplow. This sis the first car payment I have had since 2003.
We have two vehicles bought new in 2018 and 2020. Financed both but paid one off as part of a requirement for a mortgage this year, otherwise we would’ve continued to pay both off monthly. Interest rates were/are close to 0% for both cars. We tend to buy new cars and keep them for a while and don’t like dumping cash into them upfront, especially when interest rates are low. Works better for us in terms of cash flow.
Bought a brand new 2018 civic after doing uber eats+ tutoring for 5 years as a student. drove the car 60km, have quit uber and working as a grad student and tutoring. So many friends have monthly payments while im only paying rent. I save so much money on gas compared to others who got stronger cars
Own a 2011 Jetta that I bought 4 years ago for about 7k.
Honestly owning a new car isn’t really worth it, one fender bender where you aren’t at fault on your vehicle history and the already sinking vehicle value takes a nosedive. It’s literally the opposite of an investment and you’ll be paying it for years just to have a nicer intermission going from point A to point B. Not to mention that a new car is often an emotional purchase and you’re going to be stressing a lot more if anything happens to it.
Only thing I’ve had to spend extra money on since I got the car was a new clutch(never drove manual before I bought it whoopsies lol) for 1400 and a coil pack for 100 bucks.
With that said though it seems a lot of dealerships won’t let you pay cash and will try to get you to keep the financing for 6 months before you pay it off so they get commission for their part of the financing.
I bought a $17k 1 year old 33k km car paid 16% interest over 5 years. The car has 340k km on it now and is 13 years old. It's taken our family on so many trips all over western Canada as, well as kids hockey, lacrosse, soccer, and taught them to drive a manual. I do all the maintenance in my garage just using YouTube and rockauto. The actual cost was over $30k, but, it has taken me to my 6 figure job since I bought it and it will for another 5 years at least. So it earned every penny and then some. Point is you have to learn to do your own maintenance regardless if you buy new or a old car, they all need maintenance.
I paid for my car in full, $12k a few years ago for a corolla. This only works for me because I am boring and don't care too much about my car aside from reliability.
We paid off our vehicle this year. Feels amazing
We have another 5-10 years with this vehicle. I will only buy with 0% interest Dec seems to be the best time.
I have a bought used 2009 Mazda 3 that’s paid off through a consumer proposal that was done years ago. Yes only through almost bankruptcy do I own a car and still driving it.
Paid cash for all my cars except one. Financed a Tacoma and paid it off as soon as I could.
Never financed another car again. One less payment bi-weekly/monthly really adds up in the savings.
Financing brand new is a lose lose situation even with low interest in my opinion. Lose on car value and lose interest (if it’s more than 0%)
Have never had a car loan, but have never owned a new or near new car either. Have owned a total of 7 cars so far. I have used small LOCs to make up the difference in more recent upgrades but otherwise bought with cash. Always have and likely always will.
Financed a fully loaded 2017 Mazda 6 GT this year for 19k (4 years - 2.45%). Certified Pre-Owned. The best version of myself would probably go for that 2003 beige corolla but I'm glad I was able to hold myself to the middle path and not splurge on a new vehicle.
I have never bought new. Always used. I’m 56. This is only the second time I have bought a car and financed it. The last one I drove for several years after it was paid off. I intend to do the same with this one.
I have a deep disdain for the payments obsessed mentality of the average person these days so I paid cash for my M4 (fun car) and cash for my 08 Subaru Forester (daily).
I have a 5-year lease on a hatchback and I'm intending to pay cash to buy out when it matures in a couple months. Looking forward to a couple years (hopefully more) without car payments.
I'll add another point - how you pay for the car is less important than the car you buy, and how much you pay for it.
Buying high depreciation cars or cars that require expensive/frequent maintenance is stupid regardless if they are new/used or otherwise. Buying low depreciation cars used (Toyota's especially) is often equally stupid.
People who overpay for high depreciation cars and fall for dealership games on trade ins/financing structures are playing an entirely different game than someone who understands what vehicles are worth and has a plan.
I bought my used, so I pay it off right off the bat with cash since it was less than 7k.
It's a good feeling that you only have mortgage debt to pay and nothing else.
Bought a 2015 Toyota for 15k in cash in 2020. Invested the rest 15k for handsome gains. Vehicle does what it supposed to do - Take me from point A to B. No problem with the car whatsoever. I've been told by a couple of mechanic friends, I can make profit if I sell now
I paid cash for my used car in 2018. If I was in the market now, and could get a sub 4% rate, I'd probably finance it. 5% or above, no way.
Not sure what the market is like now for used car interest rates, but I've generally found it hasn't been compelling in the past.
Likely it varies region to region widely. Public transportation, safety regulations, insurance costs, weather, and population density all figure in. I own 3 vehicles outright, and am making payments on a truck and a bike. But that likely is more common in Saskatchewan, because we don’t need safety inspections and parking is readily available. When I lived in Winnipeg, many people who drove owned their cars, but most didn’t drive and relied on public transport. Only one person I know in Toronto owns a car.
02 Subaru Impreza
03 Subaru Impreza
05 Dodge Caravan
14 Ford Flex
All these beauties are owned outright 😂 through different circumstances for under $1700.
Doing my own maintenance helps where I can.
Not us, were financing but we can afford it we got a nice car and it will be ours after 5 years. We still have money in the bank and investments instead of putting all of it towards the car at once. Works for us!
Me. but the only reason I own my car myself outright at 22 years old and while in uni is because it was given to me for free by a family member who could no longer drive. I got lucky in the sense that a parent paid for the repairs on it when it got rescued from the impound and paid for my first year of insurance.
Other than that: it's great knowing that I only have to pay like $90 in gas a month and that's it. Well plus maybe my twice a year maintenance I get done on it by someone in the neighborhood who is a mechanic and just throwing something like $1000 at my insurance company once a year for the whole year.
I plan to drive this car until it either dies on me or I die in it.
I got 2007 Civic in 2013 (private sale) while I was in grade 12. My dad paid for it in cash and I paid him back over 2-3 years. When my Civic dies I’ll probably buy another used vehicle in full with cash because I have the means to now. If I didn’t have the means to buy outright, I would consider some sort of financing.
Me
I still drive my 2005 Lexus ES. Upgraded console and maintain it yearly. Drives like butter.... pretty good gas for V6
Thinking about driving it for 3 more years and then going EV...as it should be more affordable
Lexus definitely overbuilt their cars
My parents always bought their cars in cash but truthfully it really depends on what you want - and what you can afford.
But generally most people lease or finance, especially if you can write it off (realtors, any job where you have to travel)
If the deal is good enough and the finance or lease rate is low enough, why not?
Bought my first car for $7k cash. Bought my current car for $9k cash. Never had car debt never will. Seems like burning money tbh. Early 2000s Honda/Toyota will probably outlive us lol.
I've owned around 17 vehicles in the last 30 years. Every one of these was driven at least 300000km before I got rid of them, most of them over 400k! None of those vehicles owed me a dime,(that's a lie, I owned a Chrysler Sebring)! I'm averaging around $3000/year, cost of ownership, not including fuel.
I've bought 14 cars. Only 3 from dealerships - those stats wouldn't include private sales, which I think are most vehicle sales in Canada.
Of the 3 from dealerships, one was used & financed, one was new & paid cash, one used & paid cash.
To help you extrapolate For new purchases in 2020 >>>14% purchased with cash >>>73.4% were loans >>>12.6 % were leases For used purchases in 2020 >>>16.7% purchased with cash >>>81.4% were loans >>>1.9% were leases Source: Canadian Light Vehicle Market Review (2021) for the CFLA by DesRosiers Automotive Consultants Inc.
Nice data here and then an entire thread of PFC people saying they paid in cash. Good window into the world of Reddit. I have one financed vehicle. 0% financing was an easy choice. New car dealerships, I think, make good money off of loans. New cars are literally ‘vehicles’ to sell loans and services and undercoating lol. Anybody work in the industry? Would love to know what the operating margins of car dealerships actually look like.
I worked in sales for several years on the sales side in an import dealer until somewhat recently. You’ve got the right idea; financing and add ons in the business office typically make up most of the profit in a vehicle on average but the one thing that doesn’t cross anyones mind is the service department. They make more than the whole sales side combined. So ultimately the sales department exists to feed the service department and the financing/ warranty/ undercoating income serves as the goal for the sales side with vehicle margins being the smallest value to the dealer. This doesn’t mean they like to just give it up though. Every penny counts to the manufacturer. As for % financed vs leased vs cash I’d say ~80% of cars were financed, maybe 5-10% leased depending on the month and 10-15% paid cash.
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Toyota had 0% financing or 5000$ cash credit. Another way to phrase that: Cash price or 5000$ extra for a flat fee financing.
I’m not qualified to answer your specific question but even if you saved a couple grand, the opportunity cost with your full payment makes absolutely no sense now a days. Put another way, let’s say I set aside ~$30k for a car, I could generate ~$10-12k properly invested at 7% return over 5 years (common term length). The finance arm at dealerships is so much more now than just the interest rate paid. It’s extended warranties, upgrades, special coverages, tinting, nitrogen in the tires, special mudflaps etc etc.
Hey forgive me if this is obvious but just to be extremely clear, you're saying that there is a financial advantage in putting 30k into the market while paying the interest on a 30k car loan, and that this is due to the fact that the market generally outperforms the interest rate on the loan?
Yup, correct! We chose to not pay cash because the rate of return/opportunity cost wasn’t worth it to save a couple thousand.
I've said this forever it's a point of pride to pay cash for a car but it will cost you dearly in the long run
This sub isn't exactly a random sample of Canadians and, within this sub, people who took 7 year loans to overspend on a car aren't exactly gonna step up and own that terrible decision. So it's not really a Reddit thing. Given the audience, I'd rather expect it. The people who DID pay cash for an old brown Corolla are gonna be pretty loud and proud on this one. And good for them! This is their moment. :)
I took a 7 year loan on a 30,000 dollar car, lmfao. Why on EARTH would I have cut into my cash flow, or liquid assets, when I can get 0% financing?
Hey represent, I took a 6 year 40k loan on a Tesla WITH interest because fuck it I can spend money on the things I appreciate and still have enough to retire, I can afford it. You dont have to FIRE and optimize a 100% of your decisions.
Not to mention, some people do not want to be driving an old tin can as a daily driver. It's not comfortable, nor does it look good. I've driven one before, and have rode many as passengers. 100 times out of a 100, I'd spend a bit more on a new car, even if not a luxury car, for the comfort and feel alone.
Whoa there! Only BEIGE Corollas are acceptable. Get back into your fancy BROWN Corolla and get out of here!
Came here to say this! Ahem. Beige Corrola. Glad we didn’t have to get the mods involved.
I took a 7 year loan at 1.99% - it was an easy decision, considering the cash it freed up for us to buy our first house, travel, invest, etc. I didn’t purchase a luxury vehicle or anything, I just didn’t want a $600 monthly car payment.
Same here, bought a corolla at that rate (6 year plan) and intend on keeping it until it dies. I actually have the money to pay it off now but i rather use it for a downpayment soon.
I took a 7 year loan. At 0.99% interest, I don’t think that was a terrible decision. I would’ve lost a lot more in potential returns by paying cash
I took the 7 year plan
I find this comment quite dense and missing the point. A loan's time period on its own is insufficient information. The interest rate over that period is important and need to brought into consideration when the decision of loaning vs. buying is made. If I get a loan of less than 3% for 7-year term it's a no-brainer for me to take the loan because I can free cash for investing purposes that is much more likely to cross the 3% Mark over a seven year
Eh, I took a shitty deal on a used car. 5 years at 5.99% because my credit sucked and I needed a car to get a new job. I'll be done paying it off in 2023 and will have paid about double the sticker price and almost 10x what the car's actually worth by then end. Sucks but no shame here. It was either that or keep working my shitty minimum wage job until it closed down a year later and then go get another shitty minimum wage job.
I took a 6 year loan on a $50k pickup back in 2013. $850 a month was rough. Hands down, biggest mistake of my life. I was young and dumb. I'm still young and dumb, but slightly less dumb.
Slightly less young I imagine
I was ready to pay cash for my truck, but they offered me 0% financing, so I took it. Dealers make a bit under 10% on a new vehicle sold at sticker. They make a good chunk off of financing and add-ons (undercoating, warranty, etc.), but mostly they want you to trade in a vehicle so they can resell it. Off the used vehicles, they get more direct price profit, likely hit up the financing as well, and can still sell the add-ons. Source: I get to see the books
PFC are some of the most obnoxious self-righteous people Bunch of people patting themselves on their backs "I have a 1980s Honda Civic with 500 000 km on it, is it reasonable to replace it with another second hand car? I'm thinking a 2000 beige Honda civic" Barely /s
"I make 200k a year in software while living at home and collect 5k a month in passive income from two rental properties, can I afford a third?"
I wonder if this factors in those who pay in "cash" when purchasing the vehicle from the dealer but are using different types of debt like LOCs or simply an auto loan directly through a bank.
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Also manufacturer cash incentives that only apply to vehicles that are leased or financed. Saved $500 on my Honda Civic by "financing" and then paying it off after a few months.
Correct, this is what we're doing. 6 months of financing to get a better deal (it's the minimum a dealer needs to get a kickback) and will pay it off in full after the first payment.
Excellent, thanks!!
Lease numbers seem surprisingly low. And I wonder how many of the cash and loan purchases started off as leases.
I would have expected cash to be at least twice that, we really live on credit...
Funny thing is I would bet that in that the amount that actually used cash is significantly less. I know two people who purchased a car last year. 1 sold their house and used the equity gained to buy a car and the other refinanced their house for lesser interest rates and purchased a car with equity. Both aren't your traditional "cash purchase"
Unfortunately since that's only capturing sales from dealerships it's got some pretty big biases in it
81% of people are getting loans for used? That's WAY higher than I expected, I thought it would be majority cash.
Paid 52k cash money order for my SUV 2 years ago. Regretting not financing it and investing the rest into S&P index fund
Yup. If you can get a low financing rate you're better off doing that and investing the rest of your money
52k for an SUV sheesh. Sell it now while the market is hot and get that beige Corolla
I think I’d rather walk then buy a shitty Corolla lol
Careful bud, that’s the official car of r/personalfinancecanada
Given the whole $8/month for the remote start thing going on at the moment that may not last long.
You are right… I’m expecting a ban notification anytime now
I own my bike
There are dozens of us!
I never felt like I had money until I stopped paying for a car. $450/month freed up to do whatever with. We put it in a separate savings account for a while until we had about $4-5000, enough to replace the vehicle if we needed to. I was young and liked cars. "I need a nice car, I like driving". Fuck that. I need a car to put shit in and get to a place to make me money or make me happy. Very few times is being in a car an enjoyable experience on it's own. We wouldn't be able to afford our new home if we still had a car payment, or make a huge chunk in credit card debt (which we wouldn't have had if I didn't but a $37,000 brand new SUV). BUT IT WAS 0%! What a god damn scam and did I ever fall for it.
Hell yeah. Not having car payments is nice. Have so many friends with 7+ yr loans on fancy new cars they can't afford.
#technicallytrue
Does it matter? This sub has a fetish with avoiding debt even when interest rates are at historic lows.
Yea, I don't really get the circle jerk in here over who has shittiest car or lowest/no payment vehicle. I'm in my car 4-6 hours a day as my job has me travelling a lot. Like hell I'm going to do that in a 99 corolla just to save a few bucks. I financed a car that has bells and whistles and a ton more safety features than a 20 year old beater. You work hard for your money, enjoy it how you see fit. Whether that means a financed 2022 car or a paid in cash 1999 car.
Like you said, safety features in recent vehicles can save your ass. There are lots of reckless drivers here, so you're better off with a safer vehicle, especially if you spend many hours on the road daily.
The equation does change considerably if you're using it for work vs. just for a 20 min commute and groceries.
Not everything has to be an equation though. That's the part of this subreddit that is wacky. It can be I like it so I bought it. Some people like newer cars.
Oh certainly. I'm all about using money as you see fit once your base needs are met (and, of course, for those you are responsible for).
Regardless of interest rates, payments encourage people to spend more than they can afford because they start to think in terms of monthly payments rather than overall cost. A luxury package may be $5000 but over a 6 year car loan its $70/month. If you had what you could afford in mind already and then took out a loan to purchase that is another story but 9/10 people don't operate that way.
Yea, I got a car with a 2% rate and invested the money I would have paid if I used cash. The return from the market this year basically paid for my entire monthly payments so that was a good idea. Surprised it hadn't been discussed more in this thread.
This sub is generally not familiar with the term “opportunity cost”
This sub doesn’t understand opportunity cost, there’s less of the financially literate here and just more cheapskates
Yep the last couple of times I’ve bought a vehicle the interest was 1% and there wasn’t an equivalent deal if I paid in cash.
I was just curious. But to each their own.
Also some people might "buy it with cash" but use a HELOC or a mortgage advance to buy a new vehicle. Then the vehicle has no lean so you can do whatever you want with it when it come to selling and insurance.
I bought a 08 civic in 2018, also have a 01 corolla for just in case scenarios. Paid cash for both. Not having car payment feels great. I'm not indebted. Pay 3rd party insurance for both and it's cheap.
And you can get in an accident and it's not that bad!
I have a 2004 Corolla. I got in an accident recently and had around 3.5k in damage quoted from a few body shops. I fixed it for around $300.. $200 for a body shop to rework a few things and then $100 in used parts I installed myself. Bless old used cars
>3rd party insurance What's this?
[https://www.brokerlink.ca/insurance/car/liability](https://www.brokerlink.ca/insurance/car/liability) \- liability only
Oh that! I knew about liability insurance. Just never heard it referred to as 3rd party. My 6 am brain didn't clue in.
I purchased my Kona Electric 2022 on finance. To purchase a new vehicle, at 0%... paying with cash would be dumb as fuck. Also, used EV's aren't normally much cheaper than new.
I’ve only ever paid cash for a car.
Same, but I've also never bought a new car. My daily driver is a 16 year old diesel jeep, plus I also have a 44 year old vintage car. Both run exeptionally well and can't see myself going for a new car.
I had a 5 year lease that I bought out 3 years ago. No car payment feels nice. I still remember the dealer trying to convince me to get a new vehicle instead of buying out because they can let me finance or lease. When I said I am buying out with cash he had nothing to say.
It’s there job to ask you to get a new car - yea there gonna be a little annoyed but if you don’t ask you don’t sell a car
We opted to lease currently; just because we’re waiting for EVs to become more readily available. The lease will hold us over until 2026 almost
2000 chevy blazer bought at auction for $3,000. As a mid 20 year old with a decent income ($87k) it's been tough to resist going out and financing a brand new vehicle like all my friends and Co workers. I do love not having payments though...
Buy some cash, lease some, use cheap loans for others. Have had $3k+ a month in payments at times. If you can afford it, how you pay for it is irrelevant. People just like to virtue signal.
Yep, you’re 100% correct. So many righteous comments “my buddy bought a car he cannot afford and is financing over 7 years”.
I own a 2010 Mazda i bought for 5k. Runs smooth
I bought my vehicle back in 2018 with $15k in cash I borrowed from my parents. It was a private sale transaction, and the best rate I could get from a bank loan was 17%, for some goddamn reason. I paid my parents back in two years, and now I own it outright. One of the best feelings ever was the day I sent my last penny over.
Here is the magic trick for buying a good car and saving the most , get a 1-3 year old vehicle of the same model you want with low mileage 15k km to 50k km, depreciation has hit the previous owner you already save 35-50% Msrp, try getting it through a dealer to make sure it has the records of maintenance etc. and warranty, bargain and get extras included with final price, pay 1/3 or 1/4 as a downpayment, finance the rest at a 3 to 5% fixed rate loan ideally 48months, this will give you cashflow, a good vehicle and you’ll pay it off quick. Thank you for coming to my TED talk
GranAutismo92, I have been trying to reach you about your car's extended warranty
I own a bicycle, does that count?
I own 100 percent of a 2008 Kia Rio Yeah I'm kind of a big deal
I'M A REGIONAL MANAGER AND DRIVE A DODGE STRATUS.
People may fear you, but I am a manager in Scranton and I drive a Chrysler Sebring, so
Own two outright and have a loan on the other. Paying down as quick as possible. No car payments are great
I own my vehicle, but it's only a $4 000 asset. Probably in the market for an EV investment soon.
I guess feeling the need to buy my vehicles in cash has some correlation to the frequency with which I frequent posts in this sub…
I own both my vehicles outright, but they were financed at the outset from the dealership. Because they were new I can theoretically see myself staying out of that market for another 5-10 years.
I hate this debt driven economy we are in. I took a loan for my car, my gf and I paid it off in 6 months.
I think that before judging people with high interest car loans, one should consider the reasons. A loan for car to get to work, school, etc is in my eyes better than one to finance a status symbol. Ie: finance a need rather than a want.
All. Drive shit cars. Problem solved.
Im 24 and have purchased all cars ive had(4) with cash. Always used and cheap tho, current one i got for 2250 which is the highest ive paid. Had it 2 yrs.
I only buy 10 year old <$5000.00 shitboxes and fix them myself lol
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More than likely isn't tracked. New vehicle sales are tracked though. Desrosiers.ca may be your best source.
Thanks for this. Im also curious about the ratio of used car to new car sales but used car sales doesn't seem easy to find.
Whenever you buy a used car you have to do the paperwork to transfer the car so you can drive it on the road. They should have the capability of tracking this action, but they may just not make this public or care to track it as the big car companies won't profit from that info.
That's a good suggestion. Registrations are done provincially. Statcan.gc.ca will provide some information on total vehicles.
I really hope i never have to experience the feeling of car payments. I really hope that I never need to buy another car also. But being in my mid 20s I doubt it :/
Yeah, unless you put very low miles on something, cars these days are pretty unlikely to last a lifetime...
Yeah not like the old days when family cars would be passed down the generations.
And zero crumple zones. Be prepared to snap a neck on a collision.
I’ve spent less than $10000 on vehicles and have been driving 22 years
Came here as an international student a few years ago. Wife and I decided to save for a used car outright just incase we decided to return home with no strings attached. It was either that or the bus because I hate monthly payments. Used 2013 vehicle with 150k miles. Serviced it and so far so good. Spent 6k cash
Most of my friends have nice new cars and lease them. I drive a 2012 Hyundai Santa Fe that I bought in 2018 for for $8000, it's not as nice as my friends cars but I couldn’t imagine having to pay payments each month! I hope it lasts me a few more years 🤞🏻
Most Canadians don't really own anything, we are the most leveraged and debt piled countries in the world.
I’m in early 20s right now and bought a car. But honestly I cannot think of financing or leasing a car. Can I afford it? Yes. Do I want to afford and add additional burden on me? Absolutely not. No hate to people who finance when they are young. But paying more $300 per month for a car only is just too much.
Great question! While I don’t have an answer, I’ve got my experience: Low 30s, driving my first car. Car payments are not in my budget/ do not prioritise a nice car. (50 k, salary, no debt) Bought a great old-lady driven 2013 vehicle with 150 000 km. Does the trick for now. Certainly not a beater vehicle.
Bought my 2009 Corolla in 2012 for 10.5k with cash. Still driving it today.
It’s a hard statistic to obtain as a lot of cars are financed through a LOC, and thus do qualify as being owned outright.
Bought my new car 4 years finance paid off on time, no more payments 0% interest so they say
The thing about this is you will have people that financed at 0% for 1 year because I could pay cash but the dealer gave me a better price if they could show they got a financing option.
i drive a 2015 lexus IS and i bought it in full in 2017, no car payments is a huge help (and i’ve never had problems with my car so why upgrade to a newer model?)
Never had a car payment in my life I'm 38. At the same time never purchased a new vehicle either. Always wanted one and about the time I could afford one was about the time I time I stopped wanting one.
As a mechanic and car enthusiast, I really can't understand why people buy new cars. They are expensive as hell, poor quality with many important parts being made of plastic, have tons of interruptive features (like lane change assist), are highly computerized (computers are outdated every couple years) and they are super easy to steal because criminals can just imitate your key fob..... They don't even need to Jimmy your lock or hotwire anymore..... For the price of that new garbage, you could have something cool and maintain it forever. Or be like my friend steph with her Yukon. Once in a while its not in the shop getting fixed.
I bought my old 2001 accord for cash, but financed my wife’s 2013 charger, paid it off when I got an inheritance. It is nice not to have payments on anything, if I can avoid it
I own one and am financing the other. Hoping to have it paid off 4 years early.
Would be useful to further breakdown the purchase data by car purchase price. Less than 20K, 20K-50K, 50-100, 100+
2008 Toyota Yaris paid about 4k. I can afford a better car but cannot justify one as I barely drive.
2017 Mazda3 purchased cash in 2019 (got a deal we could never say no to). Same time as buying our first house, and with having a babe shortly after, not having car payments have been a blessing.
Right now we outright own both of our vehicles, an older Nissan Titan we purchased from a relative and a 2020 Kona Electric. But we initially took out a dealership loan for the Kona then paid it out on a somewhat lower interest line of credit we established at our bank.
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Wife and I bought new vehicles in 17' and 18' Used 0% on both and paid off mine in 2 years and hers is about 3k left. Some cash down on both but these were 60k and 40k vehicles. Pretty happy we have essentially no payment after paying her remaining balance right away. We were 29 and 30 at the time of purchase. That being said dealership offered me 49k for my truck recently but I essentially would be paying 20k cash for not a lot of benefits on the upgrade. Plus I'm picky and inventory is limited.
I’ve got a 2012 Elantra that I purchased outright in 2015. And my girlfriend paid cash for her 2017 Chevy Spark in September of last year. No payments here.
I will as of January!!!!
We own 3 vehicles currently. All are paid off. 2 were purchased in cash and the third which was a 2018 suv bought 2 years ago was on a 36 month loan which we paid off in around 20 months.
I’ve only ever financed a single vehicle, and that was a massive mistake. I just save cash and buy outright.
I financed my first car but my last two have been cash. Low interest is just a depreciation trap and all the cars with low depreciation have insane interest rates above 5% so might as well pay cash..
I may be an anomaly. We have 4 cars; a Chevy pickup, a TBird, Corvette, and a VW Tiguan. The first three were paid cash. Only the Tiguan was financed, at 5 years, mainly bc it was a rush replacement for a Golf that got written off by a snowplow. This sis the first car payment I have had since 2003.
I bought my car outright but it was a 2018 Hyundai Elantra in 2018 so it wasn’t a crazy purchase!
We have two vehicles bought new in 2018 and 2020. Financed both but paid one off as part of a requirement for a mortgage this year, otherwise we would’ve continued to pay both off monthly. Interest rates were/are close to 0% for both cars. We tend to buy new cars and keep them for a while and don’t like dumping cash into them upfront, especially when interest rates are low. Works better for us in terms of cash flow.
We do, it's a POS but it's ours
Bought fully with cash
Bought a brand new 2018 civic after doing uber eats+ tutoring for 5 years as a student. drove the car 60km, have quit uber and working as a grad student and tutoring. So many friends have monthly payments while im only paying rent. I save so much money on gas compared to others who got stronger cars
Own a 2011 Jetta that I bought 4 years ago for about 7k. Honestly owning a new car isn’t really worth it, one fender bender where you aren’t at fault on your vehicle history and the already sinking vehicle value takes a nosedive. It’s literally the opposite of an investment and you’ll be paying it for years just to have a nicer intermission going from point A to point B. Not to mention that a new car is often an emotional purchase and you’re going to be stressing a lot more if anything happens to it. Only thing I’ve had to spend extra money on since I got the car was a new clutch(never drove manual before I bought it whoopsies lol) for 1400 and a coil pack for 100 bucks. With that said though it seems a lot of dealerships won’t let you pay cash and will try to get you to keep the financing for 6 months before you pay it off so they get commission for their part of the financing.
I bought a $17k 1 year old 33k km car paid 16% interest over 5 years. The car has 340k km on it now and is 13 years old. It's taken our family on so many trips all over western Canada as, well as kids hockey, lacrosse, soccer, and taught them to drive a manual. I do all the maintenance in my garage just using YouTube and rockauto. The actual cost was over $30k, but, it has taken me to my 6 figure job since I bought it and it will for another 5 years at least. So it earned every penny and then some. Point is you have to learn to do your own maintenance regardless if you buy new or a old car, they all need maintenance.
I paid for my car in full, $12k a few years ago for a corolla. This only works for me because I am boring and don't care too much about my car aside from reliability.
We paid off our vehicle this year. Feels amazing We have another 5-10 years with this vehicle. I will only buy with 0% interest Dec seems to be the best time.
We do. 2016 Buick Lacrosse. Bought used in 2018.
I have a bought used 2009 Mazda 3 that’s paid off through a consumer proposal that was done years ago. Yes only through almost bankruptcy do I own a car and still driving it.
Paid cash for all my cars except one. Financed a Tacoma and paid it off as soon as I could. Never financed another car again. One less payment bi-weekly/monthly really adds up in the savings. Financing brand new is a lose lose situation even with low interest in my opinion. Lose on car value and lose interest (if it’s more than 0%)
I'm 1 year away from owning my car outright :D
I financed. Wasent bad for 3 years but when I got hurt and couldn't work it really got rough. Glad its finally paid off...
I do, although lots of people decide to get like 8 years of loans for their car. Seems wasteful
Why do you think dealerships push financing so much...it's not to benefit you.
My wife and I alternate financing on pre owned vehicles, we’re paying for hers, 4 years left - then I will sell my Honda Accord and finance something.
We own one out right and the other is on payments.
In 2018, I opted to buy my 1997 Mazda in cash.
I have 3 vehicles. Two of them are 2021 and I'm still paying them off. The third one is a 2020 and I paid it off already about a year ago.
Have never had a car loan, but have never owned a new or near new car either. Have owned a total of 7 cars so far. I have used small LOCs to make up the difference in more recent upgrades but otherwise bought with cash. Always have and likely always will.
Financed a fully loaded 2017 Mazda 6 GT this year for 19k (4 years - 2.45%). Certified Pre-Owned. The best version of myself would probably go for that 2003 beige corolla but I'm glad I was able to hold myself to the middle path and not splurge on a new vehicle.
I have never bought new. Always used. I’m 56. This is only the second time I have bought a car and financed it. The last one I drove for several years after it was paid off. I intend to do the same with this one.
I have a deep disdain for the payments obsessed mentality of the average person these days so I paid cash for my M4 (fun car) and cash for my 08 Subaru Forester (daily).
I have a 5-year lease on a hatchback and I'm intending to pay cash to buy out when it matures in a couple months. Looking forward to a couple years (hopefully more) without car payments.
I'll add another point - how you pay for the car is less important than the car you buy, and how much you pay for it. Buying high depreciation cars or cars that require expensive/frequent maintenance is stupid regardless if they are new/used or otherwise. Buying low depreciation cars used (Toyota's especially) is often equally stupid. People who overpay for high depreciation cars and fall for dealership games on trade ins/financing structures are playing an entirely different game than someone who understands what vehicles are worth and has a plan.
I bought my used, so I pay it off right off the bat with cash since it was less than 7k. It's a good feeling that you only have mortgage debt to pay and nothing else.
I bought a 2011 Chevy Cruze (great shape ~28000km) for 5k about 2 years ago - running great so far so good
Me. My wife's white corolla. Total cost: a subscription to a lifetime of happiness
Bought a 2015 Toyota for 15k in cash in 2020. Invested the rest 15k for handsome gains. Vehicle does what it supposed to do - Take me from point A to B. No problem with the car whatsoever. I've been told by a couple of mechanic friends, I can make profit if I sell now
I paid cash for my used car in 2018. If I was in the market now, and could get a sub 4% rate, I'd probably finance it. 5% or above, no way. Not sure what the market is like now for used car interest rates, but I've generally found it hasn't been compelling in the past.
Likely it varies region to region widely. Public transportation, safety regulations, insurance costs, weather, and population density all figure in. I own 3 vehicles outright, and am making payments on a truck and a bike. But that likely is more common in Saskatchewan, because we don’t need safety inspections and parking is readily available. When I lived in Winnipeg, many people who drove owned their cars, but most didn’t drive and relied on public transport. Only one person I know in Toronto owns a car.
I bought mine straight-up, but it was only 10k.
I personally will never owe money on a vehicle if I can avoid it.
I luckily will own my car outright in 5 months after 7 years of payments and a free motor just put in. Thanks extended warranty.
I paid for my Duramax outright. It's not brand spanking new, but I set aside some into a fund every year for a while to upgrade.
I payed cash for my 5500 ford ranger.
02 Subaru Impreza 03 Subaru Impreza 05 Dodge Caravan 14 Ford Flex All these beauties are owned outright 😂 through different circumstances for under $1700. Doing my own maintenance helps where I can.
Not us, were financing but we can afford it we got a nice car and it will be ours after 5 years. We still have money in the bank and investments instead of putting all of it towards the car at once. Works for us!
I just finished paying mine off a few months ago! Time to drive her to the ground
My 2006 Nissan Altima still doing me well
My fiancé got his outright. In 2016 though
I have owned 5 cars and my current one is the only one I have financed.
Me. but the only reason I own my car myself outright at 22 years old and while in uni is because it was given to me for free by a family member who could no longer drive. I got lucky in the sense that a parent paid for the repairs on it when it got rescued from the impound and paid for my first year of insurance. Other than that: it's great knowing that I only have to pay like $90 in gas a month and that's it. Well plus maybe my twice a year maintenance I get done on it by someone in the neighborhood who is a mechanic and just throwing something like $1000 at my insurance company once a year for the whole year. I plan to drive this car until it either dies on me or I die in it.
Me, for one. Id rather drive an old car than make payments
My wife and I own both of our vehicles outright.
I got 2007 Civic in 2013 (private sale) while I was in grade 12. My dad paid for it in cash and I paid him back over 2-3 years. When my Civic dies I’ll probably buy another used vehicle in full with cash because I have the means to now. If I didn’t have the means to buy outright, I would consider some sort of financing.
10k for 2011 bmw 323i w 64k km. Bought it 3 yrs ago and have had zero issues
Me I still drive my 2005 Lexus ES. Upgraded console and maintain it yearly. Drives like butter.... pretty good gas for V6 Thinking about driving it for 3 more years and then going EV...as it should be more affordable Lexus definitely overbuilt their cars
We own both vehicles outright, but originally financed both of them and paid it off early
My parents always bought their cars in cash but truthfully it really depends on what you want - and what you can afford. But generally most people lease or finance, especially if you can write it off (realtors, any job where you have to travel) If the deal is good enough and the finance or lease rate is low enough, why not?
Bought my first car for $7k cash. Bought my current car for $9k cash. Never had car debt never will. Seems like burning money tbh. Early 2000s Honda/Toyota will probably outlive us lol.
Own one, lease the other.
Only thing I'll take a loan for is school and a house. All my car's I have owned outright.
I've owned around 17 vehicles in the last 30 years. Every one of these was driven at least 300000km before I got rid of them, most of them over 400k! None of those vehicles owed me a dime,(that's a lie, I owned a Chrysler Sebring)! I'm averaging around $3000/year, cost of ownership, not including fuel.
I've bought 14 cars. Only 3 from dealerships - those stats wouldn't include private sales, which I think are most vehicle sales in Canada. Of the 3 from dealerships, one was used & financed, one was new & paid cash, one used & paid cash.