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 aim is to assist you make better financial choices by providing you with interactive financial calculators and tools, publishing original and objective content, by enabling you to conduct your own research and compare data for no cost to help you make sound financial decisions. Bankrate has agreements with issuers, including but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this website are provided by companies who pay us. This compensation can affect the way and where products are displayed on the site, such as the order in which they may appear within the listing categories in the event that they are not permitted by law for our mortgage, home equity, and other home lending products. However, this compensation will not influence the information we provide, or the reviews that appear on this website. We do not include the entire universe of businesses or financial offerings that could be available to you. Peter Cade/Getty Images
6 min read . Published December 01, 2022
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers to navigate the details of borrowing money to purchase cars. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers feel confident to control their finances with clear, well-researched information that breaks down otherwise complicated subjects into digestible pieces. The Bankrate guarantee
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If you have questions about money. Bankrate has answers. Our experts have helped you understand your money for more than four years. We strive to continuously provide our readers with the professional advice and the tools required to succeed throughout life’s financial journey. Bankrate follows a strict standard of conduct, which means that you can trust that our information is trustworthy and accurate. Our award-winning editors and journalists produce honest and reliable content to help you make the right financial decisions. The content we create by our editorial staff is objective, factual, and not influenced through our sponsors. We’re transparent regarding how we’re able to bring quality content, competitive rates and helpful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the placement of sponsored products and, services, or by you clicking on specific links on our website. Therefore, this compensation may affect the way, location and in what order items are listed in the event that they are not permitted by law. We also offer mortgage, home equity and other products for home loans. Other elements, such as our own rules for our website and whether the product is available within the area you reside in or is within your personal credit score could also affect how and where products appear on this website. Although we try to provide 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 choose to purchase an older vehicle for savings? Making the decision between that brand-new car smell or a pre-owned vehicle is more than just price -however, it’s a crucial element. Driving new costs $716 per month, whereas used averages at $526, according to Experian’s data for the fourth quarter of 2022. If you’re looking to save money on your initial purchase, a pre-owned car is a great option. However, you must consider the cost over the life of ownership, including repair and maintenance. It could be that buying new is the most cost-effective option for your budget. What you should take away
New is often a good choice if you require the most recent features as well as lower maintenance costs at the beginning. It is possible to buy used if you are willing to sacrifice certain features in order to save money on the initial purchase and insurance.
Compare prices: New vs. used cars There are options for scouting for your next purchase, it’s brand-new or secondhand. You can find new cars at local dealers or through search engines like or Edmunds. Used cars can be found through dealerships, however, they are also available (which could be cheaper)via independent dealers, private-party sellers or superstores such as . In general used vehicles are more affordable than new cars. But both have increased dramatically in value over the past few years. The cost of new cars has risen from a monthly average of $554 in 2019 to $667 in 2022. That’s an 18.5 percentage difference. Also, used cars experienced a drastic jump from an average of $391 to $515 which is a 27.4% difference. To best prepare for the costs of owning a carwhether it’s new or usedand give you a sense of purchase costs and five-year maintenance costs. Here’s a breakdown of the price 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
The typical listing price
$35,338
$22,895
Estimated monthly payment
$668
$449
Estimated cost of the first year of ownership maintenance costs
$140
The $1,371 monthly payments are calculated on average rates of interest for both new and used cars as of Q1 2022 and a 60-month term. Maintenance and repair expenses for your first year as a new owner is according to Edmunds. The price shouldn’t be the only aspect you consider when selecting a car. You should also weigh vehicle depreciation security features, reliability, as well as your own preferences. Considerations when buying a new car Buying a new car is a lower-maintenance investment that is based on the most recent technology. Benefits of purchasing a new car is equipped with a range of features including many that you can choose from when you locate the right dealership. Customization: One of the main benefits of buying a new vehicle is that you can get it outfitted to your preferences You can pick the color and style you want and request any add-ons that you like. Technology advancements: There are practical advantages as well. You will be driving away with the most recent technology with safety and security features. Higher interest rates: With the purchase of a brand new vehicle, you are more likely to receive a better interest rate for an auto loan than with buying a used car, often by a few percentage points. The reliability: You won’t need to worry about any undiscovered mechanical issues in the event that you purchase a new. Plus, the should limit the amount you spend on maintenance and repairs in the first few months of owning. Pros of buying new buying a new vehicle is more costly and has a few disadvantages that could eat away at your wallet. The cost is higher The newer cars are usually hundreds of dollars more expensive than their predecessors that are used, which can make a down payment or monthly loan payments harder to afford. Depreciation: There’s also the issue of to deal with the speed at which your vehicle decreases in value. According to the old saying, new vehicles lose value when they leave the lot. That means that new vehicles will lose 20 percent of their value within the first year of ownership, and depreciation continues over at least 10 years following the purchase. More expensive insurance costs new cars typically cost more to insure because of the higher risk of theft, higher value , and other elements. If you think that this is the best choice for you, plan and look out for . Making the right decision about when to buy your car and could help reduce initial costs. Considerations when buying used Used vehicles usually have less cost and are more depreciating, however they also have other flaws to be aware of. Pros of buying used With an used car, you will reduce the cost of your monthly installment, insurance and other costs. Plus, depreciation will likely happen at a slower rate. Have a look at the following benefits less expensive The primary advantage is that they’re generally cheaper than new counterparts. Getting the same model you want a few years old could help you save a couple thousand dollars. Lower insurance costs and fees Some pre-owned vehicles have lower , titling fees and sales tax. It can save you money on the sale and throughout the course of the car’s lifespan. A slower depreciation rate: Older vehicles also appreciate slower. Rather than losing 20 percent of its value within the first year of ownership an older car of three years would just lose 10 percent. A negative experience with buying used might make you adjust your priorities to make your next purchase and research the history of the car and invest additional funds to maintain the vehicle. Making compromises: You’ll have to search to find the style, color and you’re looking for. In the end you might need to compromise. The market for cars is highly competitive and you might not be able to check every checkbox. Car history: You will also need to check the car’s maintenance records to confirm you know that previous owners was responsible for it. It is recommended to take the car to a trusted mechanic for a routine checkup- including a brake check and engine test — before closing any deal. Expect to pay about $100 for the services of a mechanic, but it is well worth it. Costs for maintenance will increase even if your car is in decent condition the used vehicle will inevitably need more repairs and maintenance in the future. This could reduce the savings you make 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 pre-owned car is a good choice. However, you must be aware of the expenses in the long run that includes repairs and maintenance. Pre-owned certified options If you’re thinking of purchasing used, but aren’t sure about trusting the vehicle’s history, a vehicle is a great choice. A certified used car is a pre-owned vehicle that has been subjected to a thorough examination by the dealer or manufacturer. These vehicles are considered to be an intermediate between used and new vehicles in terms of upfront price since you’ll pay extra to have the vehicle inspected. This certification adds value for a driver who wants security from a car that is in excellent condition with the cost of a brand-new vehicle. What should you consider when deciding whether to buy a new or used car Deciding between a new or used car comes down to factors including financial considerations and your tastes and preferences. Consider these issues when choosing the type of vehicle that is the best choice for you. Budget multiple costs are usually less expensive when you purchase a used vehicle rather than a new one. Everything from the to dealer costs are less costly when you purchase an older vehicle. Depending on the vehicle you select the cost of buying it will typically be lower for a used car. If you are calculating the numbers to determine much car you can afford, look beyond the monthly payments and insurance. Make sure you include annual registration fees, fuel expenses as well as repairs and maintenance. Bells and whistles One of the benefits of buying a brand new vehicle is that it’ll come with the most recent technologies in safety and technology. What’s more, if being capable of choosing a particular colour or design of the interior is important to you, a new car purchase can simplify this. If you buy a used car you might have to do a lot of searching to get the exact car you want. However, the pleasure of choosing the right tire package, sound system or seating might not be worth the cost-savings of skipping these accessories and instead purchasing second-hand. If you’re concerned about the safety of the car you’re thinking about buying using the tools on the website to determine the safety rating. Maintenance needs A slightly older could have higher maintenance costs, which is a crucial consideration when you’re on a tight household budget. A large portion of the maintenance that comes with a new car is covered by warranty. But if you’re leaning toward a used car that’s no longer covered by warranty, this isn’t necessarily an issue. It’s possible to get the added protection you need. The average extended warranty cost roughly $1,480, but it is possible to pay much more or less, based on the type of vehicle you own and the level of protection 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 conducting a thorough research on the car is the most crucial element in . Your research should include checking the safety rating of the vehicle along with the cost of insurance and five-year cost-to-own. Make sure to assist you in making the right choice. It is also advisable to make the effort to test drive various vehicles and talk with a couple of sellers and get quotes from a variety of . Make sure you are getting the lowest monthly payment and the most competitive financing terms to save more of your hard-earned dollars in your pocket. The bottom line Deciding between new and used cars comes down to a variety of factors, such as the concerns you have regarding depreciation, budget, your desire to get specific features, and the length of time you’re planning to keep your vehicle. If you’ve got a vehicle in your mind, research and before you head to the dealer for 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 with the details of borrowing money to purchase 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 take control of their finances with concise, well-studied information that breaks down otherwise complicated subjects into bite-sized pieces.
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