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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 aim is to assist you make smarter financial decisions by providing you with interactive tools and financial calculators that provide objective and original content. We also allow you to conduct your own research and compare data for no cost to help you make informed financial decisions. Bankrate has partnerships with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this site are from companies who pay us. This compensation can affect the way and where products appear on this website, for example, for example, the sequence in which they appear in the listing categories in the event that they are not permitted by law. This applies to our loan products, such as mortgages and home equity and other products for home loans. This compensation, however, does affect the information we provide, or the reviews that you read on this site. We do not include the vast array of companies or financial offerings that could be available to you. Peter Cade/Getty Images
6 min read . Published on December 1, 2022.
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers with the ways and pitfalls of taking out loans to buy a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers to take control of their finances by providing precise, well-researched, and well-written information that breaks down otherwise complicated subjects into digestible pieces. The Bankrate promise
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You have money questions. Bankrate has the answers. Our experts have been helping you master your finances for more than four years. We are constantly striving to provide consumers with the expert advice and the tools required to be successful throughout their financial journey. Bankrate follows a strict policy, which means you can be confident 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. The content created by our editorial staff is objective, factual and uninfluenced through our sponsors. We're transparent about the ways we're in a position to provide quality content, competitive rates and practical tools for you , by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for placement of sponsored products or services, or when you click on certain links posted on our website. Therefore, this compensation may affect the way, location and in what order items are displayed within the categories of listing in the event that they are not permitted by law for our mortgage, home equity and other home loan products. Other factors, like our own proprietary website rules and whether or not a product is offered in your area or at your own personal credit score could also affect how and where products appear on this site. While we strive to provide an array of offers, Bankrate does not include information about every financial or credit product or service. This is the decision that millions of car owners make each year: Do you buy a brand-new ride or go with an older car to save money? The decision between a brand new car's smell or a pre-owned vehicle will be more than price- but it's an important factor. The cost of a new car is $716 per month while used vehicles average $526, according to Experian's for the fourth quarter of 2022. If you're looking to reduce the cost of your first purchase, a second-hand vehicle is an excellent option. But , you'll have to think about the price over the duration of ownership, which includes maintenance and repairs. It could be that buying new is the most cost-effective option for your finances. What you should take away
New is often an excellent option if you require the most recent features as well as cheaper initial maintenance costs. Buying used might fit better in the event that you're willing to compromise some features to save on the initial purchase and insurance.
Compare the costs of new and. used vehicles There are a variety of options to check for your next purchase, new or used. New cars can be found at local dealerships or through search engines such as or Edmunds. Used cars are available through dealerships, but you can also locate them -- potentially cheaper -through independent dealers and private-party sellers, or through superstores like , or . In general, used cars are cheaper than brand new vehicles. But both have increased dramatically in value over the past few years. New car loans have increased from a monthly median of $554 in 2019 to $667 in 2022. That's an 18.5 percent difference. Used cars also saw the most dramatic jump, from $391 on average to $515, an increase of 27.4% difference. In order to be prepared for the expense of owning a vehicle -- new or used -- and can give you an idea of the cost of buying and five-year maintenance costs. Here's a price breakdown of Edmunds for a brand-new Honda Accord versus a used one. New 2022 Honda Accord EX-L
Refurbished for 2017 Honda Accord EX-L
Price of the typical listing
$35,338
$22,895
Estimated monthly payment
$668
$449
Estimated cost of the first year of ownership maintenance costs
$140
$1,371 Monthly payments are based on average interest rates for both new and used cars as of Q1 2022 and a 60-month period. Maintenance and repair expenses in the first year of ownership are according to Edmunds. Price shouldn't be the only factor that you take into consideration when selecting an automobile. You must also consider factors like depreciation security features, reliability, and your preferences. When buying a brand new car. Buying a brand new vehicle is a less-maintenance investment that is based on the most recent technology. The advantages of buying a new car is equipped with a range of features that you get to pick if you can find the right dealer. Customization: One of the main benefits of buying a new car is the possibility of having it outfitted to your preferences You can pick the color and design you prefer and ask for any extras that you like. Current technology: There are practical advantages too -- you will drive off with the latest technologies as well as safety equipment. Higher interest rates: With a new car purchase it is also more likely to get an interest rate that is better on an auto loan than with an used vehicle purchase, often by a few percentage points. Reliability: You don't have to deal with any issues with your mechanical system in the event that you purchase a new. Additionally, it will reduce your spending on repairs and maintenance in the first few year of your ownership. The disadvantages of buying a new car purchasing a brand new car is more expensive and has some negatives that could cost you your budget. Costlier new cars are typically several thousands of dollars more expensive than their used counterparts, which could make a down payment or monthly loan payments harder to afford. Depreciation: You'll also have to consider the speed at which your vehicle decreases in value. As the saying goes, new cars are worthless as soon as you take them off the lot. New vehicles lose 20% of their value during the first year of ownership, and depreciation will continue for the first 10 years of ownership. Higher insurance costs: New cars often cost more to insure due to the higher risk of theft, their higher value and other related elements. If you do decide that is the right 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 expenses. Considerations when buying used Used vehicles typically have a lower price tag and depreciate more slowly but have other shortcomings to watch for. Advantages of buying used a used vehicle, you can reduce the cost of your monthly installment, insurance and other fees. Additionally, depreciation is likely to happen at a slower rate. Consider these key benefits below less expensive: Used vehicles' primary benefit is that they tend to be cheaper than new counterparts. Getting the same model you're looking for a few years old can save you some thousand dollars. Costs and insurance fees are lower Some pre-owned vehicles have less titling, registration and sales tax. You may save both on the sale and throughout the life of the vehicle. Slower depreciation: Used vehicles also appreciate slower. Instead of losing 20 percent of their value within its first few years of ownership the car that is three years old will likely only lose close to 10 percent. Cons of buying used may require you to adjust your priorities when you are ready to purchase your next car and research the history of the car and invest additional funds to keep the car in good condition. Making compromises: You will have to research to find the color, style and design you desire. In the end you might have to make compromises. The market for cars is highly competitive, and you may be unable to tick every mark. Car history: You'll have to also check the maintenance history of your vehicle to confirm you know that previous owners was able to take good care of the vehicle. It's advisable to bring the vehicle to a reputable mechanic for a routine checkup- including a brake check and engine test -- prior to concluding any deal. It is possible to pay about $100 for the services of a mechanic, but it is well worth the cost. Increased maintenance costs even if your car is in good shape, a used car will require more repairs and maintenance over the course of time. This could reduce the savings you get from the initial purchase, so be sure to consider your long-term budgeting when selecting new versus used. If you are trying to save money on your initial purchase, a pre-owned car is an excellent option. But you'll need to be aware of the expenses throughout the duration of ownership -- including repairs and maintenance. Certified pre-owned alternatives If you're leaning toward purchasing a used car but are uncertain about trusting the vehicle's history, a vehicle is an excellent choice. A certified used car is one that has undergone a complete examination by the dealer or the manufacturer. These vehicles are considered to be an equalizer between brand new and used cars in terms of cost upfront because you'll have to pay for the inspection. This additional certification is perfect for drivers who want the safety of a vehicle that is in excellent condition without the expense of a brand new vehicle. Which is the best way to decide whether to buy a new or used vehicle Deciding between a new or used car will come down to factors including factors like your budget and tastes and preferences. Consider these issues when choosing which type of purchase is best for you. Budget multiple costs are usually lower when you buy an older vehicle instead of a new one. Everything from the to dealer fees are less costly when you buy a used vehicle. Depending on the vehicle you choose the price of purchase will also typically be less when you buy a pre-owned car. When you crunch the numbers to determine how much you can afford for a car take a look beyond the monthly payments and insurance. Include annual registration costs, fuel expenses as well as repairs and maintenance. The bells and whistles one advantage of buying a brand new vehicle is that it comes with the most recent technology in safety and technology. What's more, if being capable of choosing a particular car color or interior finish is important to you, then a new car purchase can help you achieve this. If you buy a used car you might have to spend hours searching to get exactly what you want. However, the pleasure of choosing the right tires such as a sound system, seating or seating may not outweigh the savings of avoiding these accessories and instead purchasing used. If you are concerned about the safety of the vehicle you're looking at using the tools on the site to verify the safety rating. Maintenance needs An older model might have more expensive maintenance costs, and this is an important consideration if you're on a tight budget for your household. Much of the maintenance associated with a new car is likely to be covered under warranty. But if you're leaning toward an old car that's not longer under warranty, this isn't necessarily an issue. You may be able to obtain the added protection you need. The typical extended warranty is roughly $1,480, but you can pay higher or lower, depending on your vehicle and the level of coverage you select. What can you do to get the best bargain on your car, regardless of whether you choose to purchase a brand new or used, remember that research into the vehicle is the most important factor in . Your research should include checking the model's safety record along with the cost of insurance and the cost-to-own for five years. Try to help make an informed choice. Also, make the effort to test drive several vehicles and compare prices with a couple of sellers by getting estimates from several . Make sure you are getting the lowest monthly payment and most competitive financing terms to keep more of your hard-earned dollars in your pockets. The main thing to consider is whether you want new and used is a matter of balancing to many factors, including your concerns around depreciation, your budget, your determination to have certain features and how long you plan on having your vehicle. Once you have a car you want to purchase, do some research and before you head to the dealer for the most affordable price. Find out more
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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the details of borrowing money to buy an automobile. 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 passionate about helping readers gain confidence to manage their finances through providing precise, well-researched and clear information that breaks down complicated subjects into bite-sized pieces.
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