Should you buy a new or used car? Part Of Buying a Car In this series Buying a Car Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by providing you with interactive tools and financial calculators, publishing original and objective content. We also allow you to conduct research and compare information for free to help you make financial decisions with confidence. Bankrate has agreements with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this site are from companies who pay us. This compensation can affect the way and where products are displayed on the site, such as for instance, the order in which they may appear within the listing categories in the event that they are not permitted by law. Our mortgage, home equity and other home loan products. However, this compensation will have no impact on the information we publish, or the reviews that you see on this site. We do not include the vast array of companies or financial deals that might be open to you. Peter Cade/Getty Images
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 assisting readers with the details of borrowing money to purchase cars. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are committed to helping readers gain the confidence to control their finances with clear, well-researched information that breaks down otherwise complex topics into manageable bites. The Bankrate guarantee
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A new purchase is the best option if are looking for the most modern features and lower initial maintenance costs. A used purchase might be better if you are willing to compromise some features to lower the initial purchase and insurance.
Compare prices: New and. used cars There are a variety of options to check out your purchase, whether it’s brand-new or secondhand. New cars can be found at a local dealership or by searching on sites like or Edmunds. Used cars are offered through dealerships, however, you can also locate them (which could be cheaper)via independent dealers as well as private-party sellers and superstores such as . In general the case of used cars, they are less expensive than brand new vehicles. However, both have seen a dramatic increase in cost over the past few years. New car loans have increased from a monthly average of $554 in the year 2019 to $667 in 2022. That’s which is an 18.5 percentage difference. Also, used cars experienced a drastic jump from $391 on average to $515, an increase of 27.4 percentage difference. To best prepare for the costs of owning a car- new or used — and can give you an idea of the cost of buying and maintenance costs for five years. Here’s the breakdown of prices of Edmunds for a brand new Honda Accord versus a used one. New 2022 Honda Accord EX-L
Refurbished 2017 Honda Accord EX-L
Price of the typical listing
$35,338
$22,895
Estimated monthly payment
$668
$449
Estimated first year of ownership maintenance costs
$140
The $1,371 monthly payments are calculated upon the average interest rates for both new and used vehicles as of Q1 2022 and a 60-month duration. Maintenance and repair costs for during the initial year are according to Edmunds. The price shouldn’t be the only aspect you consider when selecting the right car. It is also important to consider depreciation security features, reliability, and your preferences. Things to consider when purchasing a new car Buying a new car is a lower-maintenance investment that is based on the most recent technology. Benefits of purchasing a new car comes with a variety of options that you get to pick when you locate the right dealer. Customization: One of the main benefits of purchasing a brand new car is that you can get it outfitted to your preferences and preferences. You can choose the color and design you want and request any add-ons that appeal to you. Current technology: There are practical advantages also — you’ll get a car that is equipped with the latest technology with safety and security features. More favorable interest rates: When you make an investment in a brand-new car it is more likely to secure a better interest rate for an auto loan as opposed to buying a used car typically by a couple of percentage points. The reliability: You won’t need to deal with any undiscovered mechanical issues when you buy new. In addition, you can limit the amount you spend on maintenance and repairs in the first few year of your ownership. Pros of buying new buying a new vehicle is more costly and has some negatives that could cost you your budget. More expensive: New cars are often several thousands of dollars higher than predecessors that are used, which can make a down-payment or monthly loan payments harder to afford. Depreciation: You’ll also have to contend with , or the speed at which your vehicle loses value. According to the old saying, new cars lose value the moment you take them off the lot. that new cars lose 20 percent of their value in the first year, and depreciation continues throughout the first 10 years of ownership. More expensive insurance costs Newer cars are generally more to insure due to the higher risk of theft, their higher value and other related factors. If you think that this is the best option for you, make a make sure you plan your budget and be aware of . It is important to plan your purchase in advance and could help reduce initial costs. When buying used, you should consider the following considerations. cars typically come with less cost and depreciate more slowly however they also have other flaws to be aware of. Pros of buying used With a pre-owned car, you could save money on the monthly payment, insurance and other charges. Additionally, depreciation is likely to occur at a slower pace. Take a closer look at these key benefits below Cheaper The main benefit is that they’re generally more affordable than their brand new counterparts. The same model you want a few years old can save you a couple thousand dollars. Lower insurance costs and fees A lot of pre-owned cars have lower fees for titling and sales tax. You could save money both on the sale and throughout the course of the car’s lifespan. Slower depreciation: Used cars also depreciate slower. Instead of losing 20 percent of their value in the initial year after purchase an older car of three years would just lose 10. Cons of buying used may require you to adjust your wish list when you are ready to purchase your next car look up the car’s history and invest additional funds to maintain the vehicle. Making compromises: You’ll have to search to find the color, style and design you’re looking for. Even then you might have to make some compromises. The auto market is extremely competitive and you might be unable to tick every checkbox. Car history: You’ll be required to verify the maintenance history of your vehicle to confirm it was owned by the original owner who was able to take good care of the vehicle. It’s wise to bring the car to a trusted mechanic for a thorough check-upfor example, a brake test and engine test prior to concluding any deal. It is possible to pay around $100 for the work of the mechanic however it’s worth the cost. Increased maintenance costs even if the vehicle is in decent condition an older car will require more maintenance and repairs over time. This can eat away at the savings you make from the initial purchase, so be sure to consider your long-term budgeting when selecting new versus used. If you’re trying to save money on your initial purchase, a used car is an excellent option. However, you must consider the costs over the life of ownership — including maintenance and repairs. Certified pre-owned alternatives If you’re thinking of purchasing used, but aren’t sure about relying on the history of the vehicle, a vehicle is an excellent choice. A certified pre-owned vehicle is one which has passed a rigorous examination by the dealer or manufacturer. They are a middle ground between new and used vehicles in terms of upfront price as you’ll be charged to have the vehicle inspected. This extra certification is ideal for drivers who want the safety of a vehicle that is in good condition, but with the cost of a brand new vehicle. Which is the best way to decide between a brand new or used car Deciding between a new or used car will come from a combination of financial considerations and your tastes and preferences. Take into consideration these factors when deciding which type of purchase is best for you. Budget Multiple costs are often lower when you buy an older vehicle instead of an entirely new model. Everything from the to dealer costs are less costly when you purchase an older vehicle. The vehicle you pick the price of purchase will typically be lower for a used car. When you calculate the numbers to figure out how you can afford a car consider more than the monthly installment and insurance. Make sure you include annual registration costs, fuel expenses maintenance and repairs. Bells and whistles One advantage of buying an all-new car is that it comes with the most recent technologies as well as safety equipment. Additionally, if being capable of choosing a particular car color or interior finish is important to you, then a new car purchase can simplify this. When purchasing a used car it is possible to do a lot of trying to find exactly what you want. However, the pleasure of selecting the most suitable tire package and sound system, or even seating could not justify the cost-savings of skipping these add-ons and buying used. If you’re concerned regarding the safety of the vehicle you’re looking at, use the tools found on the to check whether it has a safety score. Maintenance requirements A car that is older might have more expensive maintenance costs, and this is an important consideration if you’re living on a small budget for your household. A large portion of the maintenance that comes with a new car is likely to be covered under warranty. However, if you’re considering an older car that is no longer covered by warranty, it’s not a deal breaker. You can to get the extra protection you require. The average extended warranty cost about $1480, however you can pay higher or lower, depending on the type of vehicle you own and the protection you choose. What can you do to get the best bargain on your car, regardless of whether you opt to buy a either used or new, remember that research into the vehicle is the most crucial element in . Your research should include checking the car’s safety history, insurance costs and five-year cost-to-own. It is important to consider these factors when making the right choice. Also, take the time to test-drive various vehicles and talk with a few dealers, getting quotes from several . Ensure that you get the lowest monthly payments and most competitive financing terms to ensure that you keep more of your hard-earned money in your pockets. The final decision between new and used cars comes down to a variety of factors, such as the concern you have about depreciation, your budget, your desire to get certain features and how long you’re hoping to own your vehicle. Once you have a car in mind, shop around and prior to going to the dealer, make sure you get the best deal. Learn more
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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the details of borrowing money to buy an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain confidence to take control of their finances by providing precise, well-researched and clear information that breaks down otherwise complex topics into manageable bites.
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