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6 min read Published December 01, 2022
Written by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers in navigating the ins and outs of securely borrowing money to buy a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers feel confident to control their finances with clear, well-researched information that breaks down complicated subjects into digestible pieces. The Bankrate promise
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They ensure that what we write is objective, accurate and reliable. We have loans reporters and editors focus on the areas that consumers are concerned about the most — the various types of loans available as well as the best rates, the best lenders, the best ways to pay off debt and much more. So you’ll be able to feel secure when making a decision about your investment. Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you manage your finances for more than four years. We are constantly striving to provide our readers with the professional advice and tools needed to be successful throughout their financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our content is honest and accurate. Our award-winning editors and reporters provide honest and trustworthy information to assist you in making the right financial decisions. Our content produced by our editorial staff is objective, factual and uninfluenced by our advertisers. We’re transparent regarding how we’re capable of bringing high-quality content, competitive rates, and useful tools to you , by describing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the placement of sponsored products or services, or when you click on specific links on our site. Therefore, this compensation may affect the way, location and in what order products are displayed within the categories of listing in the event that they are not permitted by law. We also offer mortgage, home equity and other home loan products. Other elements, such as our own website rules and whether the product is available in your area or at your personal credit score could also affect the manner in which products appear on this site. Although we try to provide a wide range offers, Bankrate does not include the details of every credit or financial product or service. It’s the decision millions of car buyers make every year: Should you buy a brand-new ride or choose to purchase an older vehicle in order to cut costs? Making the decision between that brand-new car smell or a used car comes down to more than pricehowever, it’s a crucial aspect. The cost of a new car is $716 per month, whereas used cars average at $526 according to Experian’s for the fourth quarter of 2022. If you are trying to save money on your initial purchase, a used car is a great option. However, you must consider the costs over the course of ownership, including maintenance and repairs. It could be that buying new is the most cost-effective option for your finances. What you should take away
A new purchase is an excellent option if you require the most recent features as well as lower initial maintenance costs. A used purchase might be better in the event that you’re willing to sacrifice certain features in order to save money on the initial purchase as well as insurance.
Compare the costs of new vs. used cars There are options for scouting the best deal, brand new or pre-owned. There are new cars available at a local dealership or by searching on sites such as or Edmunds. Used cars can be found through dealerships, however, they are also available (which could be cheaper)via independent dealers and private-party sellers, or through superstores like , or . In general used vehicles are more affordable than brand new vehicles. However, both have risen dramatically in price over the last few years. New car loans have increased from a monthly median of $554 in the year 2019 to $667 by 2022, which is which is an 18.5 percent difference. Also, used cars experienced an astronomical increase from $391 on average to $515 and a 27.4% difference. For the best way to prepare for the cost of owning a vehicle -either used or new — and can give you a sense of purchase costs and maintenance costs over five years. Here’s a price breakdown by Edmunds for a brand new Honda Accord versus a used one. New 2022 Honda Accord EX-L
Refurbished for 2017 Honda Accord EX-L
The typical listing price
$35,338
$22,895
Estimated monthly payment
$668
$449
Estimated cost of the first year of maintenance expenses
$140
The $1,371 monthly payments are calculated upon the average interest rates for new and used vehicles as of Q1 2022 and a 60 month term. Maintenance and repair costs for during the initial year are based on to Edmunds. The price shouldn’t be the only factor you think about when choosing an automobile. You should also weigh vehicle depreciation, safety features, reliability and your preferences. Things to consider when purchasing a new car. Buying a brand new car will require less maintenance in the newest technology. The advantages of buying a new car is equipped with a variety of options that you can choose from when you locate the right dealership. Customization: The main benefit of buying a new car is that you can get it fitted to your personal preferences and preferences. You can choose the color and design you prefer and ask for any extras that appeal to you. Current technology offers practical benefits as well. You will be driving away with the most recent technology with safety and security features. More favorable interest rates: When you make a new car purchase, you are more likely to receive a better interest rate for an auto loan than you would with an used vehicle purchase typically by a couple of percentage points. The reliability: You won’t need to worry about any hidden mechanical problems when purchasing a brand new. Plus, the should limit your expenditure on maintenance and repairs in the first few year of your ownership. Pros of buying new, buying new is more costly and comes with a few negatives that could cost you your budget. The cost is higher The newer cars are usually many thousands of dollars higher than older counterparts, which can make a down-payment or monthly loan payment more expensive to pay for. Depreciation: You’ll also have to consider the rate at which your car loses value. According to the old saying, new cars lose value the moment they leave the lot. that new cars lose 20 percent of their value during the first year of ownership, and depreciation will continue over at least 10 years following the purchase. Higher insurance costs Newer cars are generally more to insure due to their greater risk of theft, greater value and other related aspects. If you think that this is the best option for you, you should make sure you plan your budget and be aware of . It is important to plan your purchase in advance and could help reduce initial expenses. Considerations when buying used Used vehicles typically have less cost and are more depreciating, however they also have other flaws to be aware of. Benefits of purchasing used an used vehicle, you can reduce the cost of your monthly payments, insurance, and other fees. Furthermore, depreciation may happen at a slower rate. Have a look at the following benefits: Less expensive The main advantage is that they tend to be less expensive than their new counterparts. If you find the exact model you’re looking for a few years old could help you save some thousand dollars. Lower insurance costs and fees Some pre-owned vehicles have less titling, registration and sales taxes. You could save money both on the lot and over the car’s life. A slower depreciation rate: Older cars also depreciate much more slowly. Rather than losing 20% of its value in the first year of ownership the car that is three years old will likely only lose close to 10 percent. The negatives of purchasing used could require you to adjust your priorities when you are ready to purchase your next car, research the car’s history and put aside money to keep the car in good condition. Making compromises: You’ll have to search to find the design, color and style you’re looking for. Even then you might have to make some compromises. The car market is extremely competitive right now and you might not be able to check every checkbox. Car history: You’ll also need to check the maintenance history of your vehicle to ensure that the previous owner was able to take good care of the vehicle. It’s advisable to bring the vehicle to a reputable mechanic for a checkup -for example, a brake test and engine test before concluding any deal. It is possible to pay about $100 for the services of a mechanic however, it’s worth the cost. Costs for maintenance will increase: Even if the car is in good shape an older car will eventually require repairs and maintenance over the course of time. This could reduce the savings you make from your initial purchase, so consider your long-term budget when deciding between new or used. If you’re looking to save money on your initial purchase, a pre-owned car is an excellent option. However, you must consider the costs over the life of ownership which includes repairs and maintenance. Certified pre-owned options If you’re leaning toward purchasing a used car but are uncertain about relying on the car’s past then a certified pre-owned vehicle is an excellent choice. A certified pre-owned vehicle is one which has passed a rigorous inspection by the dealership or the manufacturer. They are an equalizer between brand new and used cars in terms of cost upfront because you’ll have to pay for the inspection. This extra certification is ideal for drivers who want the security of a car in mint condition with the cost of a brand new car. What should you consider when deciding whether to purchase a brand-new or used vehicle Deciding between a new or used vehicle will come from a combination of factors like your budget and tastes and preferences. Take into consideration these factors when deciding which one is right for you. Budget multiple costs are usually less expensive when you purchase an used car rather than an entirely new model. Everything from the to dealer charges are less costly when you purchase a second-hand vehicle. The vehicle you select the price of purchase is usually lower when you buy a pre-owned car. When you crunch the numbers to figure out how you can afford a car take a look beyond the monthly payment and insurance. Be sure to include annual registration fees, fuel costs, maintenance and repairs. The bells and whistles one of the benefits of buying an all-new car is that it comes with the latest technologies as well as safety equipment. What’s more, if being in a position to choose a specific colour or design of the interior is essential to you, a new car purchase can make this easier. If you buy a used car it is possible to do a lot of searching to get exactly what you want. But, the benefits of selecting the most suitable package for tires such as a sound system, seating or seating may not outweigh the savings of avoiding these accessories and instead purchasing second-hand. And if you have concerns about the safety of the vehicle you’re looking at you should use the tools available on the to check whether it has a safety score. Maintenance needs A slightly older may have higher maintenance expenses, which is important to consider if you have a limited household budget. The majority of the maintenance involved with a brand new vehicle is covered by warranty. But if you’re leaning toward an older car that is no longer under warranty, it’s not necessarily an issue. You can to get the added protection you need. The average extended warranty costs about $1480, however you could spend far higher or lower, depending on your vehicle and the level of protection you choose. What can you do to get the best bargain on your car, regardless of whether you opt to buy a the new model or used one, keep in mind that conducting a thorough research on the car is the most crucial element in . The research you conduct should include examining the safety rating of the vehicle along with the cost of insurance and the five-year cost-to-own. Try to help make a decision. You should also take the time to test-drive several vehicles and compare prices with a couple of sellers by getting estimates from several . Ensure that you get the lowest monthly cost and most competitive financing terms to keep more of your hard-earned dollars in your pocket. The final decision between new and used comes down to several factors, including the concern you have about depreciation, budget, desire to get specific features, and the length of time you’re planning to keep your vehicle. Once you have a car in your mind, research and before you head to the dealer for the best deal. Learn more
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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers to navigate the ins and outs of securely borrowing money to purchase a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping readers gain confidence to manage their finances by providing precise, well-researched and clear facts that break down otherwise complicated topics into digestible pieces.
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