Do you want to purchase a new or used 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 smarter financial decisions by offering interactive financial calculators and tools as well as publishing original and impartial content. This allows you to conduct your own research and evaluate information for free to help you 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 Make Money The offers that appear on this site are from companies that compensate us. This compensation could affect how and where products are displayed on the site, such as, for example, the order in which they appear in the listing categories and other categories, unless prohibited by law for our loan products, such as mortgages and home equity and other home loan products. However, this compensation will affect the content we publish or the reviews that you read on this site. We do not cover the entire universe of businesses or financial offers that may be accessible to you. Peter Cade/Getty Images
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 specializes in assisting readers to navigate the ins and outs of securely taking out loans to buy an automobile. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping their readers feel confident to manage their finances by providing concise, well-researched and accurate facts that break down complex topics into manageable bites. The Bankrate promises
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If you have questions about money. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and the tools required to make it through life’s financial journey. Bankrate follows a strict policy, which means you can be confident that our information is trustworthy and precise. Our award-winning editors and reporters create honest and accurate information to assist you in making the right financial decisions. The content we create by our editorial team is objective, factual and uninfluenced from our advertising. We’re transparent regarding how we’re capable of bringing high-quality content, 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 are compensated in exchange for the promotion of sponsored goods andservices or through you clicking specific links on our website. So, this compensation can impact how, where and in what order items are displayed within the categories of listing in the event that they are not permitted by law for our mortgage home equity, mortgage and other products for home loans. Other factors, such as our own website rules and whether a product is available in your area or at your self-selected credit score range can also impact the manner in which products appear on this website. While we strive to provide an array of offers, Bankrate does not include details about each financial or credit item or service. It’s the choice that millions of car buyers make every year: Should you buy a brand-new ride or go with an older car in order to cut costs? Making the decision between that brand-new car smell or a pre-owned vehicle is more than just cost — but it’s an important factor. New cars cost $716 per month, while the used vehicles average $526, according to Experian’s figures for the fourth quarter of 2022. If you’re looking to save money on your initial purchase, a pre-owned vehicle is an excellent option. However, you must consider the cost over the life of ownership, which includes the maintenance as well as repairs. You might find that purchasing new is the most cost-effective option for your finances. The most important thing to remember
A new purchase is an excellent option if you are looking for the most modern features and lower maintenance costs at the beginning. It is possible to buy used if you are willing to compromise on some features to lower the initial purchase as well as insurance.
Compare prices: New vs. used vehicles There are options for scouting the best deal, new or used. You can find new cars at a local dealership or by searching on sites like or Edmunds. Used cars are offered through dealerships, however, you can also locate them — potentially cheaper — through independent dealers, private-party sellers or superstores like , or . In general, used cars are cheaper than new cars. However, both have seen a dramatic increase in cost over the past few years. New car payments have jumped from a monthly average of $554 in 2019 to $667 by 2022, which is an 18.5 percentage difference. Also, used cars experienced a drastic jump from $391 to $515, which is a 27.4 percent difference. In order to be prepared for the costs of owning a vehicle — new or used -and give you an idea of costs for purchase and five-year maintenance costs. 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
Used 2017 Honda Accord EX-L
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 the average interest rates for both new and used vehicles in Q1 2022 and a 60 month duration. Repair and maintenance costs in the first year of ownership are based on to Edmunds. Price should not be the only thing you think about when choosing the right car. You must also consider factors like depreciation security features, reliability, and your preferences. Considerations when buying a new car. A brand-new car is a lower-maintenance investment with the latest technology. The advantages of buying a new car is equipped with a variety of options — many of which you are able to choose if you can find the right dealer. Customization: One of the main benefits of buying a new car is that you can have it outfitted to your preferences and preferences. You can choose the color and style that you want and request any add-ons that you like. Current technology is a practical benefit as well. You will drive off with the latest technologies as well as safety equipment. More favorable interest rates: When you make a new car purchase, you are more likely to secure the best interest rate for an auto loan than you would with an used vehicle purchase usually by a few percentage points. The reliability: You won’t need to contend with any potential undiscovered mechanical issues in the event that you purchase a new. Additionally, it will reduce your spending on maintenance and repairs in the initial months of owning. Cons of buying new Unfortunately purchasing a brand new car is more expensive and has some downsides that can dent your budget. The cost is higher The newer cars are usually several thousands of dollars more expensive than predecessors that are used, which can make a down payment or monthly loan payment more expensive to pay for. Depreciation: You’ll also have to contend with , or the speed at which your vehicle loses value. As the saying goes, new vehicles lose value as soon as you drive them off the lot. That means that new cars lose 20 percent of their value in the first year, and depreciation is continued over the first 10 years of ownership. Costs for insurance are higher new cars typically cost more to insure due to the higher risk of theft, greater price and other factors. If you do decide that is the right option for you, make a plan and look out for . Timing your car purchase carefully will help you cut down on initial expenses. When buying used, you should consider the following considerations. vehicles usually have the lowest price and depreciate more slowly however they also have other flaws to look out for. Advantages of buying used a pre-owned car, you will save money on your monthly payments, insurance, and other costs. Additionally, depreciation is likely to occur at a slower pace. Take a closer look at these benefits below less expensive The primary benefit is the fact that they are generally more affordable than their brand new counterparts. If you find the exact model you want a few years old could save you thousands of dollars. Reduced insurance costs and fees Some pre-owned vehicles have lower , titling fees and sales tax. You could save money both on the purchase and over the life of the vehicle. Slower depreciation: Used vehicles also appreciate slower. Rather than losing 20 percent of its value within its first few years of ownership, the car that is three years old will likely only lose around 10. A negative experience with buying used might make you adjust your priorities for your next ride look up the car’s history and spend extra funds to maintain the vehicle. Making compromises: You will need to look for the style, color and you desire. Even then you might have to make some compromises. The car market is extremely competitive right now and you might not be able to tick all the checkbox. Car history: You’ll be required to verify the vehicle’s maintenance record to ensure you know that previous owners took good care of it. It is recommended to take the car to a trusted mechanic for a routine checkupfor example, a brake test and engine test before closing any deal. Expect to pay about $100 for the services of a mechanic, but it is well worth it. Increased maintenance costs: Even if the car is in good shape an older car will inevitably need more repairs and maintenance over the course of time. This could reduce the savings you get from your first purchase, so you should consider your long-term budget when deciding between new or used. If you are trying to reduce the cost of your first purchase, a pre-owned car is a good choice. But you’ll need to consider the costs throughout the duration of ownership which includes maintenance and repairs. Certified pre-owned options If you’re thinking of purchasing used, but aren’t sure about relying on the car’s past, a vehicle is an excellent choice. A certified used car is a pre-owned vehicle which has passed a rigorous examination by the dealer or the manufacturer. These cars are an equalizer between used and new vehicles in terms of upfront price since you’ll pay extra to have the vehicle inspected. This extra certification is ideal for a driver who wants the safety of a vehicle that is in good condition, but without the price tag of a brand new vehicle. How to choose whether to purchase a brand-new or used vehicle The decision between buying a brand new or used car comes down to a variety of factors, including the financial aspect and your preferences and preferences. Be aware of these aspects when choosing the type of vehicle that is the best choice for you. Budget multiple costs are usually cheaper when you buy a used vehicle rather than a new one. Everything from dealer charges is less expensive when you buy a used vehicle. Based on the car you select the cost of buying it will typically be lower for a used vehicle. If you are calculating the numbers to determine you can afford a car, look beyond the monthly installment and insurance. Include annual registration costs, fuel expenses, maintenance and repairs. The bells and whistles one advantage of buying an all-new car is that it’ll come with the most recent technology in safety and technology. What’s more, if being able to select a specific car color or interior finish is important to you, a new car purchase can make this easier. If you buy a used car, you may have to do a lot of trying to find exactly what you want. However, the pleasure of choosing the best tire package and sound system, or even seating may not outweigh the cost savings by avoiding these add-ons and buying second-hand. If you’re concerned regarding the security of the car you’re thinking about buying you should use the tools available on the to check its safety ratings. Maintenance requirements A car that is older could have higher maintenance costs, which is important to consider if you’re living on a small budget for household expenses. The majority of the maintenance involved with a new car is likely to be covered under warranty. However, if you’re considering a used car that’s no longer under warranty, it’s not an issue. You can to get the added protection you need. The typical extended warranty is roughly $1,480, but you can pay more or less, depending on the model of your car and the amount of coverage you choose. How to find the best price on your vehicle, whether you choose to purchase a brand new or used, remember that conducting a thorough research on the car is the most important factor in . The research you conduct should include examining the car’s safety history, insurance costs and the cost-to-own for five years. Make sure to assist you in making an informed choice. It is also advisable to make the effort to test drive multiple vehicles and shop around with a few sellers by getting estimates from several . Ensure that you get the lowest monthly cost and the most competitive terms for financing to ensure that you keep the most of your hard-earned cash in your pockets. The bottom line Deciding between new and used comes down to many factors, including your concerns around depreciation, budget, determination to have certain features and how long you’re hoping to own your car. Once you have a car in mind, shop around and before you head to the dealership for the best deal. Find out 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 to navigate the details of borrowing money to buy an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to control their finances by providing concise, well-studied details that cut complex topics into manageable bites.
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