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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 assisting readers with the details of borrowing money to buy cars. Edited 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 feel confident to control their finances with clear, well-researched facts that break down complex topics into manageable bites. The Bankrate guarantee
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You have money questions. Bankrate has the answers. Our experts have been helping you manage your money for more than four decades. We are constantly striving to give our customers the right guidance and the tools necessary to make it through life’s financial journey. Bankrate adheres to a strict code of conduct standard of conduct, which means that you can trust that our content is truthful and reliable. Our award-winning editors, reporters and editors produce honest and reliable content to help you make the best financial decisions. Our content produced by our editorial staff is factual, objective and is not influenced from our advertising. We’re transparent about how we are capable of bringing high-quality content, competitive rates and helpful 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 placement of sponsored products or services, or through you clicking specific links on our site. This compensation could impact how, where and when products are listed in the event that they are not permitted by law. We also offer mortgage, home equity and other home lending products. Other factors, like our own rules for our website and whether or not a product is available in the area you reside in or is within your self-selected credit score range may also influence how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include the details of every financial or credit product or service. It’s the decision millions of car owners make every year: Should you buy a brand-new ride or opt for an older car in order to cut costs? Making the decision between that brand-new car smell or a used car comes down to more than just cost -however, it’s a crucial factor. Driving new costs $716 per month while used averages at $526, according to Experian’s figures for the fourth quarter of 2022. If you’re trying to lower the cost of your initial purchase, a used car is a good choice. However, you must consider the price over the duration of ownership, including repair and maintenance. It could be that buying new is the better choice for your finances. Key takeaway
A new purchase is a good choice if you are looking for the most modern features and cheaper initial maintenance costs. A used purchase might be better in the event that you’re willing to sacrifice 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. You can find new cars at local dealerships or search on websites like or Edmunds. Used cars are offered at dealerships, however they are also available and possibly cheapervia independent dealers, private-party sellers or superstores such as . In general, used cars are cheaper than new cars. However, both have risen dramatically in value over the past few years. New car loans have increased from a monthly average of $554 in 2019 and $667 by 2022, which is which is an 18.5 percent difference. The used cars saw a drastic jump from $391 on average to $515 and a 27.4 percent variation. In order to be prepared for the expense of owning a car- new or used -it can provide an idea of the cost of buying and maintenance costs over five years. Here’s a breakdown of the price by Edmunds for a brand new Honda Accord versus a used one. New 2022 Honda Accord EX-L
Refurbished 2017 Honda Accord EX-L
The typical listing price
$35,338
$22,895
Estimated monthly payment
$668
$449
Estimated first year of ownership maintenance costs
$140
$1,371 Monthly payments are based on the average rates of interest for both new and used vehicles in Q1 2022 and a 60 month duration. Maintenance and repair costs for during the initial year are according to Edmunds. Price should not be the only aspect that you take into consideration when selecting an automobile. You must also consider factors like depreciation, safety features, reliability as well as your own preferences. Considerations when buying a new car. Buying a brand new car will require less maintenance that is based on the most recent technology. Benefits of purchasing a new car is equipped with a variety of options that you can choose from if you can find the right dealer. Customization: The primary benefit of purchasing a brand new car is that you can get it outfitted to your preferences — you can select the color and design you prefer and ask for any extras that you like. Modern technology offers practical benefits also — you’ll get a car that is equipped with the latest technology and safety features. Higher interest rates: With an investment in a brand-new car, you are also more likely to get an interest rate that is better on an auto loan as opposed to an used vehicle purchase, often by a few percentage points. Reliability: You don’t have to deal with any hidden mechanical problems when purchasing a brand new. Additionally, it will reduce your expenditure on repairs and maintenance in the first few months of owning. Pros of buying new buying a new vehicle is more expensive and has a few negatives that could cost you your budget. The cost is higher: New cars are often hundreds of dollars more expensive than their older counterparts, which can make a down-payment or monthly loan payments harder to afford. Depreciation: There’s also the issue of to consider the rate at which your car loses value. As the saying goes, new cars are worthless as soon as you take them off the lot. that new vehicles lose 20% of their value in the first year, and depreciation is continued throughout at least 10 years following the purchase. More expensive insurance costs new cars typically cost more to insure because of their higher chance of theft, their higher value and other related factors. If you do decide that is the right choice for you, plan and look out for . It is important to plan your purchase in advance will help you cut down on initial costs. When buying used, you should consider the following considerations. cars typically come with the lowest price and are more depreciating, but have other shortcomings to watch for. Benefits of purchasing used a used car, you will save money on your monthly payments, insurance, and other fees. Furthermore, depreciation may happen at a slower rate. Have a look at these benefits below: Less expensive: Used vehicles’ primary advantage is that they tend to be more affordable than their brand new counterparts. If you find the exact model you want a few years old could help you save some thousand dollars. Reduced insurance costs and fees: Many pre-owned cars carry less titling, registration and sales tax. You may save both on the sale and throughout the car’s life. Slower depreciation: Used cars also depreciate much more slowly. Instead of losing 20 percent of their value in its first few years of ownership, an older car of three years would only lose close to 10. Cons of buying used may necessitate you to alter your wish list when you are ready to purchase your next car and research the history of the car and put aside money to keep the car in good condition. Making compromises: You’ll need to look for the style, color and you’re looking for. And even then you could have to make compromises. The market for cars is highly competitive right now and you may be unable to tick every box. Car history: You will also need to check the car’s maintenance records to make sure you know that previous owners took good care of the vehicle. It’s advisable to bring the vehicle to a reputable mechanic for a thorough check-upfor example, a brake test and engine test prior to closing any deal. Expect to shell out around $100 for the work of the mechanic, but it is well worth the cost. More expensive maintenance costs even if your car is in good shape an older car will inevitably need more repairs and maintenance in the future. This can eat away at the savings you earn from your initial purchase, so consider your long-term budgeting when selecting new or used. If you’re looking to reduce the cost of your first purchase, a pre-owned car is a great option. But , you’ll have to be aware of the expenses throughout the duration of ownership — including maintenance and repairs. Pre-owned certified options If you’re considering purchasing used, but aren’t sure about trusting the vehicle’s history then a certified pre-owned vehicle is an excellent option. A certified used car is a used car which has passed a rigorous inspection by either the dealer or manufacturer. These vehicles are considered to be a middle ground between new and used vehicles in terms of price upfront as you’ll be charged for the inspection. This additional certification is perfect for those who need the safety of a vehicle in mint condition without the price tag of a brand-new vehicle. Which is the best way to decide between a brand new or used vehicle Deciding between a brand-new or used vehicle will come down to a variety of factors, including financial considerations and your tastes and needs. Be aware of these aspects when choosing which type of purchase is right for you. Budget Multiple costs are typically lower when you buy an older vehicle instead of an entirely new model. Everything from the to dealer costs are less costly when you buy a used vehicle. The vehicle you pick the cost of buying it will typically be lower for a used car. When you calculate the numbers to figure out how much car you can afford consider more than the monthly payment and insurance. Include annual registration fees, fuel costs, maintenance and repairs. The bells and whistles one benefit of purchasing an all-new car is that it comes with the most recent technologies and safety features. Furthermore, if you want to be able to select a specific car color or interior finish is important to you, then a new car purchase will simplify this. If you buy a used car you might have to spend a long time looking for the exact car you want. But, the benefits of choosing the right package for tires and sound system, or even seating may not outweigh the savings of avoiding these accessories and instead purchasing second-hand. If you’re concerned regarding the security of the vehicle you’re looking at using the tools on the site to verify its safety ratings. Maintenance requirements A car that is older may have higher maintenance costs, which is important to consider if you have a limited household budget. The majority of the maintenance involved with a brand new vehicle will likely be under warranty. But if you’re leaning toward a used car that’s no longer under warranty, this isn’t necessarily an issue. It’s possible to get the extra protection you require. The average extended warranty costs about $1480, however it is possible to pay much more or less, based on your vehicle and the coverage you choose. What can you do to get the best bargain on your car, regardless of whether you decide to buy the new model or used one, remember that researching the vehicle is the most vital element in . The research you conduct should include examining the car’s safety history as well as the insurance cost and five-year cost-to-own. Make sure to assist you in making the right choice. Also, consider a test drive of multiple vehicles and shop around with a few dealers, getting quotes from several . Make sure you are getting the lowest monthly payments and the 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 is a matter of balancing to several factors, including your concerns around depreciation, budget, desire to get certain features and how long you plan on having your vehicle. When you’ve got a car you want to purchase, do some research prior to heading to the dealer for the best price. 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 in navigating the ins and outs of securely borrowing money to buy cars. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping readers gain the confidence to manage their finances with concise, well-studied details that cut otherwise complicated topics into digestible pieces.
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