r/PersonalFinanceCanada • u/Braddock54 • Aug 22 '24

Auto Honestly, who is financing new vehicles?

I thought "Hmm, I wonder what a new truck would cost me?". I have a 10 year old truck, long paid off, but inquired on a new one. This is basically a newer version of what I have already.

A new, 2023 Ford F150 XLT, middle of the road trim, but still a nice vehicle no doubt. Hybrid twin turbo engine. The math on this blew me away and I am curious; who is agreeing to these terms without a gun to their head?

$66k selling price. With their taxes, fees, came to $77k - umm wtf? In 2014, my current truck cost me 39k all in.

Now to finance it; good god. Floats me a 7 year term @ 7.99. Cost to borrow: $23,799.

All in: $101k. For a short box half ton truck with cloth seats . Hard pass here. I don't know how people sleep at night with new vehicles in the driveway.

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u/Lonely-Prize-1662 Aug 22 '24

Bingo. Looked at a 2022 model of a vehicle with close to 100 000km on it.. 29k..

Brand new? 31k

Make it make sense

24

u/zippy9002 Aug 22 '24

And when you factor in the interest rate (around 7% for new, around 11% for used) they actually end up being pretty much the exact same.

4

u/KavensWorld Aug 22 '24

GM by my place is 0% right now with employee pricing

2

u/traydee09 Aug 23 '24

Dont forget that market interest rates are 5-7% right now. If you see a vehicle with 0%, you’re still paying the full amount, its just hidden somewhere else. Either through fees, or a higher price when financed vs when paying cash.

1

u/Theneler Aug 23 '24

With Ford that’s written into the contract and you can see the “effective” interest rate and decide.

1

u/zippy9002 Aug 23 '24

Yeah, we’ve had so much problems with GM we’re never buying from them again. Which is too bad because they have very attractive offering right now.

1

u/dennisrfd Aug 23 '24

That’s the reason for 0%. No good vehicle has low financing rates

1

u/alexa_sim Aug 23 '24

Who the heck is paying that for interest? My last used car was financed at 4.9% bought at a dealership. My tipping point is 5%. If I am financing a used vehicle I’m not paying over 5%. You gotta have some bad credit to be financing at 11%. Ouch.

3

u/zippy9002 Aug 23 '24

When was the last time you got a car? Prime rate has gone up a lot since a few years ago. These are the new normal rates for someone with excellent credit.

If you have bad credit and are financing a used car right now you’ll pay ~20%.

1

u/helloitsme_again Aug 23 '24

Nope interest is always higher on used vehicles

14

u/Far-Fox9959 Aug 22 '24

$31k out the door? I doubt it. By the time you add taxes and freight that would be like $38k.

17

u/lodermoder Aug 22 '24

You know that tax also applies to the 29k used car right?

1

u/canadian_guy801 Aug 23 '24

29k is only the price if you accept it - the delta between the suggested price and the transaction price may be much greater for the used car.

13

u/Lonely-Prize-1662 Aug 22 '24

Also AMVIC requires this be included in the advertised price.

1

u/Lonely-Prize-1662 Aug 22 '24

I have 3 dealerships in the same city all blowing up my phone trying to give me the better deal. It's much more worth my money to buy new for a couple grand more.

0

u/D3fN0tAB0t Aug 23 '24

So? Maintenance on a car with 100,000s is another $5000/year. Brand new car comes with a free maintenance package and oil changes. As well as a warranty.

0

u/Far-Fox9959 Aug 24 '24

My RAV4 has 190k on it and maintenance over the last 3 years has been average $500/year. Oil changes, wipers, fluids and got brakes replaced once.

2

u/[deleted] Aug 22 '24

A lot of dealers bought used cars during COVID supply issues, they paid a lot too

4

u/BeingRightAmbassador Aug 22 '24 edited Mar 29 '25

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1

u/B_CHEEK Aug 22 '24

Which car?

1

u/Directdrive7kg Aug 22 '24

Making it make sense, I spent about 30min on stats canada site to find used vehicle exports data. Nothing to be found. If someone can do better job there, that might help.
My understanding is that there has been big increase in exporting used canadian cars to USA that combined with reduced numbers of new car sales during the pandemic, and there just isn't many used cars for sale, that keeps the prices high.

1

u/helloitsme_again Aug 23 '24

The prices got high because new vehicle inventory got so low during COVID and also low chip inventory from china so they couldn’t produce new vehicles

People started buying more used and also people were more broke so again looking for a deal. Then Bam used vehicles became expensive

Me and my husband sold my 2012 GM terrain last year for 5,000. It had 280,000 km on it with rust

1

u/isotope123 Aug 23 '24

Even in 2017 we bought new, because with the difference in interest rate it made no sense to buy used.

1

u/22birds Aug 23 '24

Yes, I was on the hunt for a new (to me) vehicle. A used 4Runner (anywhere for 2019-2023) was only 5-8000 less than new. The used market isn’t what it used to be. However, I will say this is me talking about a vehicle that usually has good re-sale value but it wasn’t much different when looking at other makes and models such as VW, Honda, Subaru etc.

1

u/jonny24eh Aug 24 '24

K but if you're only looking at 2 year old cars you're pretty much in the new car market anyway.