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6 minutes read. Published on December 1, 2022.
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers in navigating the ways and pitfalls of borrowing money to buy a car. The article was 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 their readers to manage their finances through providing concise, well-researched and accurate information that breaks down otherwise complicated topics into bite-sized pieces. The Bankrate promises
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You have money questions. Bankrate can help. Our experts have helped you understand your money for over four years. We continually strive to provide consumers with the expert advice and the tools required to be successful throughout their financial journey. Bankrate adheres to a strict code of conduct policy, which means you can be confident that our content is truthful and accurate. Our award-winning editors and reporters produce honest and reliable content to help you make the right financial choices. The content we create by our editorial team is objective, factual and uninfluenced from our advertising. We’re open regarding how we’re in a position to provide quality content, competitive rates, and useful tools to our customers by describing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the promotion of sponsored goods andservices or through you clicking certain links posted on our website. Therefore, this compensation may impact how, where and in what order items are displayed within the categories of listing and categories, unless it is prohibited by law for our mortgage or home equity products, as well as other products for home loans. Other factors, like our own website rules and whether the product is offered in your region or within your own personal credit score may also influence how and where products appear on this site. We strive to offer a wide range offers, Bankrate does not include details about every financial or credit product or service. This is the decision that millions of car buyers make every year: Should you purchase a brand-new car or opt for an older vehicle for savings? The decision between a brand new car’s smell or a pre-owned vehicle will be more than pricehowever, it’s a crucial aspect. New cars cost $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 vehicle is an excellent option. But you’ll need to consider the cost over the life of ownership, which includes maintenance and repairs. You might find that purchasing new is the most cost-effective option for your finances. The most important thing to remember
A new purchase is the best option if require the most recent features as well as lower initial maintenance costs. It is possible to buy used if you are 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 many options to scope out your purchase, whether brand new or pre-owned. There are new cars available at local dealerships or through search engines such as or Edmunds. Used cars are offered at dealerships, however they are also available — potentially cheaper -through independent dealers and private-party sellers, or through superstores like , or . In general, used cars are cheaper than brand new vehicles. However, both have seen a dramatic increase in price over the last few years. The cost of new cars has risen from a monthly average of $554 in 2019 and $667 in 2022. That’s an 18.5 percent difference. The used cars saw a drastic jump from an average of $391 to $515 which is a 27.4 percentage difference. To best prepare for the expense of owning a careither used or new -it can provide an idea of the cost of buying and maintenance costs for five years. Here’s the breakdown of prices from Edmunds for a brand new Honda Accord versus a used one. New 2022 Honda Accord EX-L
Used in 2017 Honda Accord EX-L
Price of the typical listing
$35,338
$22,895
Estimated monthly payment
$668
$449
Estimated first year of maintenance costs
$140
1 371 monthly installments are built upon the average interest rates for new and used vehicles as of Q1 2022 and a 60-month period. Maintenance and repair costs for the first year of ownership are according to Edmunds. The price shouldn’t be the only aspect you think about when choosing the right car. It is also important to consider depreciation, safety features, reliability as well as your own preferences. Things to consider when purchasing a new car Buying a new car is a lower-maintenance investment with the latest technology. The advantages of buying a new car comes with a wide range of features that you can choose from when you find the perfect dealership. Customization: The primary benefit of buying a new vehicle is that you can get it outfitted to your preferences — you can select the color and style you want and request any add-ons 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. Higher interest rates: With the purchase of a brand new vehicle, you are more likely to receive a better interest rate when you take out an auto loan as opposed to an used vehicle purchase usually by a few percentage points. Reliability: You won’t have to contend with any potential issues with your mechanical system in the event that you purchase a new. In addition, you can limit your spending on maintenance and repairs in the initial years of ownership. Pros of buying new buying a new vehicle is more expensive and comes with a few negatives that could cost you your pocket. The cost is higher The newer cars are usually several thousands of dollars more expensive than their predecessors that are used, which can cause a down payment or monthly loan payments more difficult to manage. Depreciation: There’s also the issue of to consider the speed at which your vehicle decreases in value. The saying goes that new cars lose value the moment they leave the lot. that new vehicles will lose 20 percent of their value in the first year of ownership, and depreciation will continue for the first 10 years of ownership. Costs for insurance are higher Newer cars are generally more to insure due to the higher risk of theft, greater price and other factors. If you choose that it is the best option for you, you should think about and consider . Making the right decision about when to buy your car will help you cut down on initial costs. When buying used, you should consider the following considerations. vehicles usually have less cost and are more depreciating, but have other shortcomings to look out for. Advantages of buying used a used vehicle, you can reduce the cost of your monthly payments, insurance, and other charges. Plus, depreciation will likely be slower. Take a closer look at the following benefits Cheaper The primary benefit 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 can save you thousands of dollars. Lower insurance costs and fees: Many pre-owned cars carry lower , titling fees and sales tax. You may save both on the lot and over the course of the car’s lifespan. Depreciation is slower: used cars also depreciate more slowly. Rather than losing 20 percent of its value in the first year of ownership, a three-year-old car would likely only lose close to 10. Cons of buying used may require you to adjust your wish list when you are ready to purchase your next car and research the history of the car and spend extra funds to keep the car in good condition. Making compromises: You’ll have to research to find the design, color and style you want. And even then you could have to make some compromises. The market for cars is highly competitive right now and you may not be able to check every mark. The car’s history: You’ll have to also check the vehicle’s maintenance record to ensure that the previous owner was responsible for it. It’s advisable to bring the car to a trusted mechanic for a routine checkup- including a brake check and engine test before concluding any deal. It is possible to pay around $100 for the work of the mechanic however it’s worth the cost. Costs for maintenance will increase: Even if the car is in good shape, a used car will require more repairs and maintenance in the future. This can eat away at the savings you make from your initial purchase, so consider your long-term financial plan when choosing new or used. If you’re trying to lower the cost of your initial purchase, a used vehicle is a good choice. But you’ll need to take into account the cost throughout the duration of ownership — including maintenance and repairs. Pre-owned certified options If you’re leaning toward purchasing a used car but are uncertain about relying on the history of the vehicle, a vehicle is an excellent choice. A certified used car is a pre-owned vehicle that has undergone a complete examination by the dealer or manufacturer. They are a middle ground between used and new vehicles in terms of upfront price because you’ll have to pay for the inspection. This certification adds value for a driver who wants security from a car in mint condition without the expense of a brand-new vehicle. What should you consider when deciding between a brand new or used car Deciding between a brand-new or used car comes from a combination of the financial aspect and your preferences and preferences. Be aware of these aspects when choosing which one is best for you. Budget multiple costs are usually less expensive when you purchase a used vehicle rather than a new one. Everything from dealer costs are less costly when you buy a used vehicle. Based on the car you select the price of purchase will typically be lower for a used car. When you calculate the numbers to determine much you can afford for a car take a look beyond the monthly payments and insurance. Include annual registration fees, fuel costs maintenance and repairs. Bells and whistles One advantage of buying a new car is that it comes with modern technologies in safety and technology. Furthermore, if you want to be able to select a specific colour or design of the interior is important to you, a new car purchase can help you achieve this. When purchasing a used car it is possible to spend hours searching to get exactly what you want. But, the benefits of selecting the most suitable tire package such as a sound system, seating or seating may not outweigh the cost savings by avoiding these accessories and instead purchasing second-hand. If you’re concerned about the safety of the vehicle you’re considering you should use the tools available on the website to determine its safety ratings. Maintenance requirements A car that is older might have more expensive maintenance expenses, which is important to consider if you have a limited budget for household expenses. A large portion of the maintenance that comes with a brand-new car will likely be under warranty. However, if you’re considering a used car that’s no longer covered under warranty, this isn’t necessarily a deal breaker. It’s possible to get the protection you want. The average extended warranty cost roughly $1,480, but it is possible to pay much more or less, depending on the model of your car and the coverage you choose. What can you do to get the best deal on your car Whether you choose to purchase a brand the new model or used one, keep in mind that research into the vehicle is the most crucial element in . 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. It is also advisable to make the effort to test drive multiple vehicles and shop around with a few dealers, getting quotes from several . Ensure that you get the lowest monthly payments and the most competitive terms for financing to ensure that you keep more of your hard-earned money in your pockets. The final decision between new and used is a matter of balancing to many factors, including your concerns around depreciation, budget, your determination to have certain features and how long you plan on having your vehicle. When you’ve got a car in your mind, research and before you head to the dealership for the most affordable price. Find out 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 in navigating the ways and pitfalls of taking out loans to purchase cars. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to manage their finances with concise, well-studied facts that break down complicated subjects into bite-sized pieces.
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