Can't Afford Used

I’m checking out the prices of some new and used cars. Each model that I’m looking at qualifies for the BC Provincial PST rebate of $1000 and the federal Ecoauto rebate of $1000. As well, they each qualify for 0.9% financing over 36 months. The cars are the Toyota Yaris, Honda Fit and Honda Civic. For each model I’m looking at base with manual transmission and air conditioning. The monthly payments after delivery charges and taxes, assuming a $7000 downpayment, are $312, $354 and $383 respectively. I don’t see how the Fit “fits” into this, since for a bit more money you can get the Civic which should be a much better car. This is comparing the Fit LX to the Civic DXG. Admitably the LX is probably a nicer package, if you’re into things like nicer cup holders.

Where things get interesting is how the used car prices compare. The best example I could find is a 2007 Yaris with 24,000km on it for $14500. On the plus side the starting price is cheaper, you can probably haggle $500 down, and there are no delivery charges. On the downside, you miss out on $2000 of rebates and the financing is likely around 4.5%. I’m working under the assumption that part of the $7000 downpayment comes from the Ecoauto rebate so this means a used car only gets a downpayment of $6000. The monthly payment on the used Yaris then $288/month. This is only $24/month cheaper than a brand new Yaris. That’s a grand total of $864 saved for 24,000km. In my mind, no one could possibly afford to blow $864 on 24000km.

Assuming that a reasonable depreciation on 1 year/24000km is $3000, the above mentioned used Yaris should be selling for $12700 max. The ad didn’t actually say if the car was a manual or automatic. If it’s an automatic then $13700 is the appropriate price.