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6 min read . Published on December 1, 2022.
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the ins and outs of securely borrowing money to buy cars. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are committed to helping readers gain the confidence to take control of their finances by providing precise, well-researched, and well-written 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 helped you understand your money for over four decades. We strive to continuously provide our readers with the professional advice and the tools required to make it through life’s financial journey. Bankrate adheres to strict standards standard of conduct, which means that you can trust that our content is honest and accurate. Our award-winning editors, reporters and editors provide honest and trustworthy content that will help you make the right financial decisions. Our content produced by our editorial staff is objective, factual and is not influenced from our advertising. We’re transparent regarding how we’re capable of bringing high-quality information, competitive rates and useful tools to our customers by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the promotion of sponsored goods or services, or through you clicking certain links posted on our website. So, this compensation can impact how, where and when products are displayed within the categories of listing, except where prohibited by law. This is the case for our mortgage, home equity and other home loan products. Other elements, such as our own proprietary website rules and whether the product is available within your region or within your own personal credit score could also affect the manner in which products appear on this site. We strive to offer an array of offers, Bankrate does not include the details of every financial or credit product or service. This is the decision that millions of car buyers make each year: Do you purchase a brand-new car or opt for an older vehicle for savings? The decision between a brand new car’s smell or an older model comes down to more than pricehowever, it’s a crucial element. 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 looking to lower the cost of your initial purchase, a pre-owned car is a great option. But , you’ll have to think about the costs over the course of ownership, which includes maintenance and repairs. It could be that buying new is the best option for your budget. Key takeaway
Buying new can be the best option if are looking for the most modern features and lower initial maintenance costs. It is possible to buy used when you’re willing to sacrifice some features to save on the initial purchase as well as insurance.
Compare the costs of new vs. used cars There are a variety of options to check for your next purchase, it’s brand-new or secondhand. New cars can be found at a local dealership or search on websites like or Edmunds. Used cars are offered through dealerships, however, you can also find them (which could be cheaper)- through independent dealers as well as private-party sellers and superstores such as . In general, used cars are cheaper than brand new vehicles. But both have increased dramatically in cost over the past few years. New car payments have jumped from a monthly median of $554 in 2019 and $667 in 2022, which is an 18.5% difference. The used cars saw a drastic jump from $391 on average to $515 and a 27.4 percentage variation. To best prepare for the expense of owning a vehicle — new or used — and can give you an idea of the cost of buying and maintenance costs for five years. Here’s a price breakdown from Edmunds for a brand-new Honda Accord versus a used one. New 2022 Honda Accord EX-L
Refurbished in 2017 Honda Accord EX-L
Typical listing price
$35,338
$22,895
Estimated monthly payment
$668
$449
Estimated cost of the first year of ownership maintenance expenses
$140
1 371 monthly installments are built on average interest rates for new and used vehicles as of Q1 2022 and a 60-month period. Repair and maintenance expenses for the first year of ownership is according to Edmunds. The price shouldn’t be the only thing that you take into consideration when selecting a car. You should also weigh vehicle depreciation security features, reliability, and your personal preferences. When buying a brand new car Buying a new car will require less maintenance in the newest technology. Benefits of purchasing a new car is equipped with a range of features — many of which you get to pick when you locate the right dealer. Customization: The primary benefit of buying a new car is the possibility of having it fitted to your personal preferences and preferences. You can choose the color and style you prefer and ask for any extras that you like. Current technology is a practical benefit as well. You will drive off with the latest technologies with safety and security features. More favorable interest rates: When you make the purchase of a brand new vehicle, you are more likely to receive an interest rate that is better on an auto loan than you would with an used vehicle purchase typically by a couple of percentage points. The reliability: You won’t need to deal with any undiscovered mechanical issues in the event that you purchase a new. Plus, the should limit your expenditure on repairs and maintenance in the first few years of ownership. Pros of buying new purchasing a brand new car is more costly and has a few negatives that could cost you your wallet. More expensive The newer cars are usually hundreds 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 consider the speed at which your vehicle is worthless. As the saying goes, new cars lose value when you take them off the lot. New vehicles will lose 20 percent of their value during the first year. depreciation is continued throughout at least 10 years following the purchase. More expensive insurance costs new cars typically cost more to insure due to the higher risk of theft, their higher value , and other aspects. If you decide that is the right option for you, make a think about and consider . It is important to plan your purchase in advance and can reduce some upfront costs. Considerations when buying used Used cars typically come with less cost and appreciate more slowly, however they also have other flaws to be aware of. Advantages of buying used a pre-owned vehicle, you can save money on the monthly installment, insurance and other charges. Additionally, depreciation is likely to be slower. Have a look at the following benefits: Less expensive The main advantage is that they are generally more affordable than their brand new counterparts. If you find the exact model you’re interested in a couple of years old can save you thousands of dollars. Costs and insurance fees are lower Some pre-owned vehicles have lower fees for titling 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 slower. Instead of losing 20% of its value within its first few years of ownership a three-year-old car would likely just lose 10 percent. A negative experience with buying used might make you adjust your list of wants for your next ride, research the car’s history and invest additional funds to maintain the vehicle. Making compromises: You’ll have to research to find the style, color and you want. In the end you might have to make compromises. The market for cars is highly competitive, and you may not be able to tick all the box. The car’s history: You’ll be required to verify the vehicle’s maintenance record to confirm that the previous owner took good care of it. It’s wise to bring the car to a trusted mechanic for a checkup -which includes a brake inspection and engine test — prior to concluding any deal. You can expect to pay about $100 for the mechanic’s efforts however it’s worth the cost. Costs for maintenance will increase even if your car is in good shape, a used car will require more maintenance and repairs over time. This can eat away at the savings you get from the initial purchase, so consider your long-term budgeting when selecting new or used. If you are trying to reduce the cost of your first purchase, a used vehicle is a good choice. But , you’ll have to be aware of the expenses throughout the duration of ownership which includes maintenance and repairs. Pre-owned certified options If you’re considering buying used but are hesitant about relying on the car’s past it’s an excellent choice. A certified pre-owned vehicle is one which has passed a rigorous inspection by either the dealer or manufacturer. These vehicles are considered to be an equalizer between brand new and used cars in terms of cost upfront since you’ll pay extra in order to get the check. This certification adds value for those who need the safety of a vehicle in mint condition without the price tag of a brand new vehicle. How to choose whether to purchase a brand-new or used vehicle Deciding between a new or used car comes down to a variety of factors, including factors like your budget and tastes and requirements. Take into consideration these factors when deciding the type of vehicle that is right for you. Budget multiple costs are usually lower when you buy an older vehicle instead of a new one. Everything from dealer charges will be less expensive when you purchase a second-hand vehicle. The vehicle you select the cost of buying it is usually lower when you buy a pre-owned car. When you crunch the numbers to determine how much car you can afford consider more than the monthly payments and insurance. Make sure you include annual registration fees, fuel expenses maintenance and repairs. The bells and whistles one advantage of buying a new car is that it comes with modern technology as well as safety equipment. Furthermore, if you want to be in a position to choose a specific vehicle color or interior finishes is essential to you, a new car purchase will make this easier. If you buy a used car you might have to spend hours searching to get exactly what you want. But, the benefits of choosing the best package for tires and sound system, or even seating could not justify the cost-savings of skipping these add-ons and buying second-hand. If you’re concerned regarding the safety of the car you’re thinking about buying using the tools on the website to determine whether it has a safety score. Maintenance needs A slightly older might have more expensive maintenance costs, and this is important to consider if you have a limited budget for your household. The majority of the maintenance involved with a new car is likely to be covered under warranty. However, if you’re considering an old car that’s not longer covered under warranty, it’s not an issue. It’s possible to get the added protection you need. The typical extended warranty is approximately $1,480. However, you could spend far more or less, based on the model of your car and the level of protection you choose. What can you do to get the best deal on your car Whether you choose to purchase a brand either used or new, keep in mind that conducting a thorough research on the car is the most crucial element in . Research should include checking the car’s safety history, insurance costs and the cost-to-own for five years. Try to help make a decision. Also, make the effort to test drive multiple vehicles and shop around with a few sellers and get quotes from a variety of . Make sure you are getting the lowest monthly payment and the most competitive financing terms to ensure that you keep more of your hard-earned dollars in your pockets. The final decision between new and used cars comes down to many factors, including your concerns around depreciation, budget, your decision to purchase certain features and how long you plan on having your car. Once you have a car in your mind, research and before you head 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 specializes in assisting readers to navigate the ways and pitfalls of taking out loans to purchase an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping readers gain confidence to manage their finances with clear, well-researched information that breaks down complex topics into manageable bites.
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