It's not as easy for young buyers to get a vehicle as the affordable 鈥渟tarter car鈥� has disappeared, auto experts say.
鈥淭here鈥檚 no such thing as a starter brand new car anymore,鈥� said Michael Bettencourt, a longtime auto journalist and co-author of an upcoming book on buying an electric vehicle in Canada. He is also a father to a 17- and 20-year old 鈥� the latter of whom will be shopping for a car soon.
With two sons that age, insurance is a nightmare, Bettencourt said. If you have a few models in mind, check out insurance rates for those vehicles before you start shopping.
鈥淔ind a site that will compare multiple insurance rates at once,鈥� Bettencourt said.
鈥淚f you鈥檙e looking between two cars 鈥� you could easily be paying much higher insurance rates on one versus the other. That may be (thousands a year) that鈥檚 better spent on paying off student debt, right?鈥�
鈥淛ust five years ago, you could buy a (new) car for less than $10,000 before fees. Now you can鈥檛 get one for less than $20,000 before fees,鈥� said Stephanie Wallcraft, a freelance automotive journalist and co-host of Modern Motoring on YouTube.
For those who can afford it, Wallcraft prefers new or certified pre-owned vehicles. In both cases, what she values is the warranty 鈥� it鈥檚 also why she doesn鈥檛 advocate for private sales or cheap used cars.
鈥淲hen you鈥檙e on a tight budget, a fixed budget, surprise repairs can really hurt you,鈥� Wallcraft said, noting that younger people are less likely to have an emergency fund for such expenses. Putting costly repairs on a credit card can quickly accumulate high interest.
鈥淲hen you buy new or certified pre-owned, you鈥檙e going to have a warranty period where if anything serious comes up, that鈥檚 going to be covered.鈥�
Bettencourt favours off-lease vehicles that are a couple years old. When people lease new cars, they will be financially dinged if they damage or fail to maintain the car, so he thinks maintenance and handling is better. These cars won鈥檛 be the cheapest on the lot, he noted.
鈥淏ut I do think that鈥檚 a quality pool of used vehicles,鈥� Bettencourt said. He would only buy privately if inspection by a mechanic was part of the sale contract.
As for electric vehicles, the federal rebate was just halted in January, but there are provincial subsidies remaining in British Columbia, Newfoundland and Labrador, Nova Scotia, Yukon, New Brunswick, Prince Edward Island and Manitoba, Bettencourt pointed out. Pre-owned is still a valuable option for this segment, he added.
鈥淭he resale values of EVs have tended to depreciate very quickly, so that provides, in a way, more of an incentive to buy an off-lease or a slightly used EV because of that high depreciation,鈥� Bettencourt said.
As for the shopping experience, Wallcraft said a salesperson at a dealership will likely ask what monthly payment you can afford 鈥� but she calls this question a trap.
鈥淲hat the salesperson is doing when they ask you that question is they鈥檙e going to try to find the most expensive car that they can talk you into,鈥� Wallcraft said, 鈥渁nd give you a really long financing term so that monthly payment is low enough that you can afford it.鈥�
Lately she鈥檚 been hearing of nine- and ten-year financing terms, which are relatively new but she expects will become more common 鈥� especially with a lack of affordable starter cars on the market for young people to buy.
The problem with a long financing term on an asset that depreciates quickly is that serious problems could arise or your needs could change before you fully own the vehicle, Wallcraft said. If your car suffers a catastrophic failure, your lifestyle changes, you move, you partner up, or you have kids, you鈥檙e still making payments on a car that鈥檚 not working for you.
If you still owe money on the car when it needs to be replaced, "that鈥檚 how you get into the trap,鈥� Wallcraft said. 鈥淏ecause then you鈥檒l go into the dealership and they鈥檒l say, 鈥榃e can roll what you still owe on your financing into your next car.鈥� Well, now you owe that much more on your next car, and it takes you that much longer to get back up above water.鈥�
It鈥檚 better to pay off the car quickly, she said. You鈥檒l own it outright faster, at which point you鈥檒l not only have no car payments, but you can easily sell it or replace it as you see fit.
At the dealership, car buyers should specify their desired financing term, not the monthly payment, Wallcraft explained. If you can afford it, get the financing term to match the warranty term. Or at least get as close as possible, she added: If the warranty is four years, try for five- or six-year financing 鈥� not eight or nine years.
It鈥檚 a good idea to bring someone with you when car shopping, Bettencourt said, especially if you have a partner, as it鈥檚 likely they will drive the car too. Go for a long test drive and connect to the Bluetooth.
鈥淗owever you think you鈥檇 use it, it鈥檚 worth spending a few minutes to attach your phone to the Bluetooth,鈥� Bettencourt said. 鈥淲hy attach it to Bluetooth for a 10-minute drive? Well if that car has issues 鈥� it makes any car more of a headache to drive.鈥�
As for add-ons, Wallcraft said she would turn down rust protection and look at an extended warranty 鈥渧ery carefully鈥� to see if it's worth it. Bettencourt agreed on the extended warranty 鈥� it may cost thousands of dollars and if you can save that money yourself in an emergency fund, you at least might have some leftover at the end of the car鈥檚 life, whereas a warranty goes nowhere if unused.
Never be afraid to walk away and try another dealership, Wallcraft added. She鈥檚 also heard of sales tactics where dealerships are telling buyers they cannot sell a car without certain add-ons.
鈥淭hey鈥檙e not allowed to do that,鈥� Wallcraft said.
鈥淚 don鈥檛 think it鈥檚 technically illegal right now but there鈥檚 actually a movement of people trying to make it outright illegal. If a dealership is trying to tell you, 鈥榃e can鈥檛 sell you the car unless you take this rust protection,鈥� try a different dealership. That鈥檚 the point at which I would not hesitate to walk away.鈥�
This report by The Canadian Press was first published Jan. 21, 2025.
Nina Dragicevic, The Canadian Press
