Should you buy 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 aim is to assist you make smarter financial decisions by providing you with interactive tools and financial calculators that provide objective and original content, by enabling you to conduct your own research and evaluate information for free - so that you can make financial decisions with confidence. Bankrate has agreements with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that are advertised on this website are provided by companies that compensate us. This compensation could affect how and when products are featured on the site, such as the sequence in which they be listed within the categories of listing, except where prohibited by law for our loan products, such as mortgages and home equity and other home lending products. This compensation, however, does affect the information we provide, or the reviews appear on this website. We do not cover the entire universe of businesses or financial offers that may be open to you. Peter Cade/Getty Images
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 is a specialist in helping readers with the ways and pitfalls of taking out loans to buy cars. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to control their finances by providing concise, well-researched and accurate information that breaks down otherwise complex topics into manageable bites. The Bankrate promises
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who ensure everything we publish will ensure that our content is reliable, honest and reliable. The loans reporter and editor focus on the things that consumers are interested about the most -- the various types of loans available and the most competitive rates, the top lenders, how to repay debt, and more -- so you'll be able to feel secure when making a decision about your investment. Editorial integrity
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If you have questions about money. Bankrate has answers. Our experts have helped you understand your money for over four years. We strive to continuously provide consumers with the expert advice and the tools required to be successful throughout their financial journey. Bankrate adheres to strict standards , so you can trust that our information is trustworthy and accurate. Our award-winning editors, reporters and editors create honest and accurate content that will help you make the right financial decisions. The content created by our editorial staff is accurate, truthful and uninfluenced by our advertisers. We're open about the ways we're able to bring quality content, competitive rates and useful tools to you , by describing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for the promotion of sponsored goods or services, or by you clicking on specific links on our site. This compensation could 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 lending products. Other elements, such as our own website rules and whether a product is available in your area or at your personal credit score can also impact the way and place products are listed on this website. While we strive to provide an array of offers, Bankrate does not include the details of each financial or credit item or service. It's the decision millions of car owners make every year: Should you purchase a brand new car or choose to purchase an older car in order to cut costs? Deciding between that new car smell or a pre-owned vehicle will be more than pricehowever, it's a crucial aspect. New cars cost $716 per month, while the used vehicles average $526, according to Experian's data for the fourth quarter of 2022. If you're looking to lower the cost of your initial purchase, a used car is a good choice. However, you must consider the costs over the course of ownership, including maintenance and repairs. You might find that purchasing new is the better choice for your budget. Key takeaway
Buying new can be a good choice if you require the most recent features as well as 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 or. used vehicles There are options for scouting the best deal, brand new or pre-owned. You can find new cars at local dealers or through search engines like or Edmunds. Used cars are offered through dealerships, however, you can also find them and possibly cheapervia independent dealers, private-party sellers or superstores such as . In general used vehicles are more affordable than brand new ones. 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 to $667 in 2022. That's an 18.5% difference. Used cars also saw the most dramatic jump, from $391 on average to $515 and a 27.4 percentage variation. In order to be prepared for the costs of owning a carwhether it's new or usedit can provide an idea of the cost of buying and maintenance costs for five years. Here's a breakdown of the price of 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 expenses
$140
1 371 monthly installments are built on average interest rates for new and used vehicles in Q1 2022 and a 60-month duration. Maintenance and repair expenses for during the initial year are based on to Edmunds. The price shouldn't be the only factor you think about when choosing a car. You should also weigh vehicle depreciation and safety features, as well as reliability as well as your own preferences. Considerations when buying a new car. A brand-new car will require less maintenance with the latest technology. Benefits of purchasing a new car is equipped with a wide range of features including many that you get to pick when you find the perfect dealership. Customization: The main benefit of buying a new car is that you can have it outfitted to your preferences -- you can select the color and style that you prefer and ask for any extras that appeal to you. Technology advancements: There are practical advantages too -- you will drive off with the latest technology as well as safety equipment. Better interest rates: With a new car purchase, you are also more likely to get a better interest rate for an auto loan as opposed to buying a used car, often by a few percentage points. Reliability: You won't have to deal with any issues with your mechanical system when purchasing a brand new. Additionally, it will reduce your expenditure on maintenance and repairs in the initial year of your ownership. Pros of buying new buying a new vehicle is more expensive and has some disadvantages that could eat away at your budget. More expensive The newer cars are usually several thousands of dollars more expensive than their predecessors that are used, which can make a down-payment or monthly loan payments harder to afford. Also, you'll have depreciation to contend with , or the speed at which your vehicle loses 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 within the first year, and depreciation continues for at least 10 years following the purchase. More expensive insurance costs new cars typically cost more to insure because of their greater risk of theft, greater price and other elements. If you choose that it is the best choice for you, plan and look out for . It is important to plan your purchase in advance and can reduce some upfront expenses. Things to consider when purchasing used vehicles typically have a lower price tag and appreciate more slowly, however they also have other flaws to watch for. Pros of buying used With a used car, you will reduce the cost of your monthly payments, insurance, and other charges. Plus, depreciation will likely occur at a slower pace. Consider these key benefits below: Less expensive: Used vehicles' primary benefit is that they tend to be cheaper than new counterparts. The same model you're looking for a few years old could help you save some thousand dollars. Reduced insurance costs and fees Some pre-owned vehicles have lower fees for titling and sales taxes. You could save money both on the purchase and over the life of the vehicle. Depreciation is slower: used cars also depreciate slower. Rather than losing 20 percent of their value within its first few years of ownership the car that is three years old will likely just lose 10 percent. 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 invest additional funds to keep the car in good condition. Making compromises: You'll have to search to find the color, style and design you want. And even then you might need to compromise. The car market is extremely competitive at the moment, and you may not be able to check every checkbox. The car's history: You'll be required to verify the maintenance history of your vehicle to ensure it was owned by the original owner who was responsible for it. It is recommended to take the car to a trusted mechanic for a checkup -for example, a brake test and engine check prior to concluding any deal. It is possible to pay around $100 for the mechanic's efforts, but it is well worth the cost. Costs for maintenance will increase even if your car is in relatively good condition an older car will eventually require repairs and maintenance in the future. This could reduce the savings you make from your initial purchase, so you should consider your long-term financial plan when choosing new or used. If you're looking to reduce the cost of your first purchase, a used car is an excellent option. But you'll need to take into account the cost in the long run which includes maintenance and repairs. Certified pre-owned alternatives If you're thinking of purchasing a used car but are uncertain about relying on the history of the vehicle, a vehicle is an excellent option. A certified pre-owned car is a used car that has been subjected to a thorough inspection by either the dealer or the manufacturer. These cars are an intermediate between used and new vehicles in terms of cost upfront since you'll pay extra in order to get the check. This extra certification is ideal for those who need security from a car in mint condition without the expense of a brand new car. Which is the best way to decide whether to buy a new or used car The decision between buying a brand new or used car comes down to a variety of factors, including factors like your budget and tastes and requirements. Consider these issues 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 will be less expensive when you buy a used vehicle. Based on the car you pick the cost of buying it will also typically be less when you buy a pre-owned car. If you are calculating the numbers to determine much you can afford for a car, look beyond the monthly payment and insurance. Make sure you 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 will include the most recent technology and safety features. Additionally, if being able to select a specific 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 may have to spend hours searching to get precisely what you desire. But, the benefits of choosing the best tires such as a sound system, seating or seating may not outweigh the cost-savings of skipping these add-ons and buying second-hand. And if you have concerns regarding the security of the vehicle you're considering, use the tools found on the website to determine its safety ratings. Maintenance requirements A car that is older could have higher maintenance expenses, which is an important consideration if you're on a tight budget for household expenses. Much of the maintenance associated with a new car is likely to be covered under warranty. However, if you're considering an old car that's not longer under warranty, this isn't necessarily an issue. You may be able to obtain the extra protection you require. The typical extended warranty is roughly $1,480, but you could spend far higher or lower, depending on the model of your car and the level of coverage you select. How do you find the most affordable deal on your car Whether you choose to purchase a brand the new model or used one, you must remember that conducting a thorough research on the car is the most important factor in . Research should include checking the model's safety record as well as the insurance cost and five-year cost-to-own. It is important to consider these factors when making a decision. Also, consider a test drive of multiple vehicles and shop around with a couple of sellers, getting quotes from several . Make sure you are getting the lowest monthly payment and the most competitive terms for financing to ensure that you keep the most of your hard-earned cash in your pockets. The final decision between new and used is a matter of balancing to many factors, including the concern you have about depreciation, your budget, your desire to get certain features and how long you're hoping to own your car. When you've got a car in your mind, research prior to heading to the dealer for the best deal. 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 ways and pitfalls of borrowing money to purchase a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain confidence to manage their finances through providing clear, well-researched facts that break down complex topics into manageable bites.
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