Depreciation, interest rates, warranty: we compare a new car with the same car at 3 years old, with real numbers.
The price gap between new and used is still huge. In Canada, a new vehicle sold for about $53,400 on average in 2025, versus about $33,700 for a used one. But the sticker price doesn't tell the whole story: depreciation and interest rates change the math a lot.
A new vehicle often loses about 20% of its value in the first year and 40 to 45% after three years. It's usually the biggest cost of owning a car, even though you never pay it directly. By buying a 3-year-old vehicle, you let someone else absorb most of that loss.
Automakers often offer promotional rates on new cars. For used cars, average rates are much higher: about 6% for a new vehicle versus about 10% for a used one, according to late-2025 data. As a result, part of the used-car advantage disappears on a loan.
| New Civic | 3-year-old Civic | |
|---|---|---|
| Price | $33,110 | about $20,000 |
| Rate (60 months) | 5.49% | 8.5 to 10.3% |
| Monthly payment | about $632 | about $410 to $428 |
| Total interest | about $4,830 | about $4,620 to $5,650 |
| Value lost over 3 years | about $13,000 to $15,000 | about $5,000 to $6,000 |
| Warranty | Full | Partial or expired |
Rough calculations before taxes. Resale value depends on mileage and condition.
Even with a higher rate, the 3-year-old car costs about $8,000 to $9,000 less over three years, mainly thanks to depreciation. In exchange, you accept a bit more mechanical risk and a shorter warranty.
More than half of new-vehicle loans now stretch to 84 months or longer, and the average payment topped $800 a month in spring 2026. A 7-year loan lowers the payment, but raises the interest and often leaves you owing more than the car is worth for years. On $28,000 at 6.72%, going from 60 to 84 months raises the interest from about $5,000 to about $7,200.
The often-winning compromise: a 2- to 4-year-old vehicle, ideally manufacturer-certified, which includes an inspection and an extended warranty. In our quiz, you can choose new, used or both to compare.