Do you want to purchase a used or new 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 goal is to help you make better financial choices by offering interactive tools and financial calculators, publishing original and objective content. This allows you to conduct research and compare data for no cost and 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 Make money The products that are advertised on this website are provided by companies that pay us. This compensation could affect how and where products appear on this website, for example for instance, the order in which they may appear in the listing categories and other categories, unless prohibited by law. This applies to our mortgage, home equity, and other products for home loans. But this compensation does not influence the information we provide, or the reviews you see on this site. We do not cover the entire universe of businesses or financial offerings that could be accessible to you. Peter Cade/Getty Images
6 minutes read. Published on December 1, 2022.
Written by Rebecca Betterton 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 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 to control their finances through providing concise, well-researched and accurate facts that break down complex topics into manageable bites. The Bankrate promise
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We make sure that everything we publish will ensure that our content is reliable, honest and trustworthy. The loans reporter and editor are focused on the points consumers care about the most — the various types of loans available and the most competitive rates, the most reliable lenders, ways to pay off debt and many more — so you can feel confident when making a decision about your investment. Integrity in editing
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You have money questions. Bankrate has answers. Our experts have been helping you manage your finances for more than four decades. We strive to continuously provide our readers with the professional advice and the tools required to be successful throughout their financial journey. Bankrate follows a strict standard of conduct, which means that you can trust that our content is truthful and reliable. Our award-winning editors and journalists create honest and accurate content that will help you make the right financial choices. Our content produced by our editorial team is accurate, truthful, and not influenced from our advertising. We’re honest regarding how we’re capable of bringing high-quality content, competitive rates, and useful tools to our customers by describing how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the promotion of sponsored goods andservices or by you clicking on certain links posted on our site. Therefore, this compensation may influence the manner, place and in what order products are listed and categories, unless it is prohibited by law. This is the case for our mortgage home equity, mortgage and other home loan products. Other factors, such as our own website rules and whether the product is offered in your region or within your own personal credit score could also affect the way and place products are listed on this website. We strive to offer an array of offers, Bankrate does not include details about each financial or credit item or service. This is the decision that 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 pre-owned vehicle comes down to more than just cost -however, it’s a crucial aspect. Driving new costs $716 per month, whereas used cars average 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 second-hand car is a great option. However, you must consider the costs over the course of ownership — including repair and maintenance. It could be that buying new is the best option for your budget. The most important thing to remember
New is often an excellent option if you want the latest features and lower maintenance costs at the beginning. It is possible to buy used in the event that you’re willing to sacrifice some features to save on the initial purchase and insurance.
Compare prices: New and. used vehicles There are many options to scope out your purchase, whether brand new or pre-owned. There are new cars available at local dealers or by searching on sites like or Edmunds. Used cars are available through dealerships, however, you can also find them and possibly cheaperthrough independent dealers, private-party sellers or superstores such as . In general the case of used cars, they are less expensive than new cars. However, both have seen a dramatic increase in price over the last few years. New car payments have jumped from a monthly average of $554 in 2019 and $667 in 2022, an 18.5 percent difference. The used cars saw an astronomical increase from an average of $391 to $515 and a 27.4 percentage variation. To best prepare for the expense of owning a vehicle -either used or new — 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
Used 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 costs
$140
The $1,371 monthly payments are calculated on average interest rates for both new and used cars as of Q1 2022 and a 60 month period. Maintenance and repair expenses for the first year of ownership are based on to Edmunds. Price shouldn’t be the only thing you think about when choosing an automobile. You should also weigh vehicle depreciation security features, reliability, and your personal preferences. Things to consider when purchasing a new car. A brand-new vehicle is a less-maintenance investment with the latest technology. The advantages of buying a new car comes with a variety of options — many of which you are able to choose if you can find the right dealership. Customization: The primary benefit of buying a new vehicle is that you can have 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. Modern technology is a practical benefit also — you’ll be driving away with the most recent technology and safety features. Better interest rates: With an investment in a brand-new car you’re also more likely to get the best interest rate on an auto loan than you would with an used vehicle purchase, often by a few percentage points. Reliability: You won’t have to contend with any potential hidden mechanical problems when purchasing a brand new. In addition, you can limit your spending on maintenance and repairs in the initial years of ownership. Cons of buying new Unfortunately, buying new is more expensive and has some negatives that could cost you your pocket. Costlier: New cars are often several thousands of dollars more expensive than used counterparts, which could make a down-payment or monthly loan payments more difficult to manage. Depreciation: There’s also the issue of to deal with the amount at which your vehicle loses value. According to the old saying, new cars are worthless the moment you drive them off the lot. That means that new cars lose 20 percent of their value in the first year, and depreciation continues throughout at least 10 years following the purchase. Higher insurance costs Newer cars are generally more to insure due to the higher risk of theft, their higher price and other factors. If you do think that this is the best choice for you, think about and consider . Timing your car purchase carefully will help you cut down on initial expenses. Considerations when buying used Used cars typically come with a lower price tag and are more depreciating, but have other shortcomings to look out for. Advantages of buying used a pre-owned vehicle, you can reduce the cost of your monthly payments, insurance, and other costs. Plus, depreciation will likely happen at a slower rate. Take a closer look at these key benefits below: Less expensive The main benefit is the fact that they are generally more affordable than their brand new counterparts. The same model you’re looking for a few years old can save you thousands of dollars. Reduced insurance costs and fees A lot of pre-owned cars have lower fees for titling and sales tax. It can save you money on the sale and throughout the car’s life. Slower depreciation: Used cars also depreciate more slowly. Rather than losing 20% of its value within its first few years of ownership an older car of three years would only lose around 10 percent. A negative experience with buying used might require you to adjust your priorities for your next ride and research the history of the car and invest additional funds to keep the car in good condition. Making compromises: You’ll have to research to find the design, color and style you desire. In the end, you may have to make some compromises. The auto market is extremely competitive at the moment, and you may not be able to check every mark. Car history: You will have to also check the car’s maintenance records to confirm it was owned by the original owner who was responsible for it. It’s advisable to bring the vehicle to a trusted mechanic for a thorough check-upwhich includes a brake inspection and engine test before concluding any deal. It is possible to pay about $100 for the services of a mechanic however it’s worth it. Costs for maintenance will increase: Even if the car is in decent condition the used vehicle will require more repairs and maintenance in the future. This could reduce the savings you make from your first purchase, so be sure to consider your long-term budget when deciding between new versus used. If you are trying to reduce the cost of your first purchase, a used vehicle is a great option. But you’ll need to consider the costs over the life of ownership — including maintenance and repairs. Pre-owned certified options If you’re leaning toward purchasing used, but aren’t sure about relying on the history of the vehicle it’s an excellent option. A certified used car is a used car that has undergone a complete inspection by either the dealer or manufacturer. These cars are a middle ground between new and used vehicles in terms of price upfront since you’ll pay extra in order to get the check. This certification adds value for drivers who want security from a car that is in excellent condition without the price tag of a brand new vehicle. What should you consider when deciding whether to buy a new or used vehicle Deciding between a brand-new or used vehicle will come down to factors including factors like your budget and tastes and needs. Consider these issues when choosing the type of vehicle that is right for you. Budget multiple costs are usually less expensive when you purchase an older vehicle instead of a new one. Everything from dealer fees is less expensive when you buy a used vehicle. Depending on the vehicle you pick, the purchase price is usually lower for a used car. When you calculate the numbers to determine much car you can afford, look beyond the monthly installment and insurance. Be sure to include annual registration fees, fuel costs as well as repairs and maintenance. The bells and whistles one of the benefits of buying a brand new vehicle is that it’ll come with modern technologies in safety and technology. Furthermore, if you want to be capable of choosing a particular car color or interior finish is essential to you, a new car purchase will make this easier. When purchasing a used car, you may have to spend a long time trying to find the exact car you want. However, the pleasure of choosing the best tires and sound system, or even seating could not justify the savings of avoiding these accessories and instead purchasing second-hand. If you are concerned about the safety of the car you’re thinking about buying using the tools on the website to determine its safety ratings. Maintenance needs An older model may have higher maintenance costs, which is a crucial consideration when you’re on a tight household budget. The majority of the maintenance involved with a brand new vehicle is likely to be covered under warranty. But if you’re leaning toward a used car that’s no longer under warranty, it’s not necessarily a deal breaker. You may be able to obtain the extra protection you require. The typical extended warranty is about $1480, however you can pay more or less, depending on your vehicle and the coverage you select. What can you do to get the best price on your vehicle, whether you opt to buy a the new model or used one, you must remember that researching the vehicle is the most vital element in . Your research should include checking the safety rating of the vehicle, insurance costs and five-year cost-to-own. Make sure to assist you in making an informed choice. It is also advisable to consider a test drive of various vehicles and talk with a few sellers and get quotes from a variety of . Be sure to 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 pocket. The final decision between new and used cars comes down to a variety of factors, such as your concerns around depreciation, budget, decision to purchase specific features, and the length of time you’re planning to keep your vehicle. When you’ve got a car you want to purchase, do some research and before you head to the dealer, make sure you get the best deal. Learn 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 in navigating the ways and pitfalls of 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 control their finances through providing precise, well-researched and clear facts that break down otherwise complex topics into manageable bites.
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