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6 minutes read. Published December 01, 2022
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ins and outs of securely taking out loans to buy cars. The article was 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 take control of their finances by providing clear, well-researched information that breaks down complicated subjects into digestible pieces. The Bankrate promise
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There are money-related questions. Bankrate has the answers. Our experts have been helping you manage your money for over four years. We are constantly striving to give our customers the right guidance and the tools necessary to make it through life’s financial journey. Bankrate follows a strict policy, which means you can be confident that our content is honest and precise. Our award-winning editors, reporters and editors create honest and accurate content to help you make the right financial decisions. The content we create by our editorial staff is accurate, truthful, and not influenced from our advertising. We’re open regarding how we’re in a position to provide quality information, competitive rates and useful tools to you , 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 placement of sponsored products andservices or when you click on certain links posted on our site. Therefore, this compensation may impact how, where and in what order items 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 elements, such as our own proprietary website rules and whether a product is offered in your region or within your self-selected credit score range can also impact how and where products appear on this site. 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 choice that millions of car buyers take each year: Should you purchase a brand new car or choose to purchase an older vehicle in order to cut costs? Deciding between that new car smell or an older model comes down to more than just price -and it’s a significant aspect. Driving new costs $716 per month, whereas used vehicles average $526, according to Experian’s data for the fourth quarter of 2022. If you’re trying to lower the cost of your initial purchase, a second-hand vehicle is an excellent option. However, you must consider the cost over the life of ownership, which includes repair and maintenance. You might find that purchasing new is the better choice for your finances. The most important thing to remember
Buying new can be the best option if are looking for the most modern features and lower maintenance costs at the beginning. It is possible to buy used when you’re willing to compromise on some features to save on the initial purchase as well as insurance.
Compare prices: New or. used cars There are options for scouting the best deal, it’s brand-new or secondhand. You can find new cars at local dealers or search on websites like or Edmunds. Used cars can be found at dealerships, however they are also available (which could be cheaper)through independent dealers as well as private-party sellers and superstores such as . In general, used cars are cheaper than new cars. But both have increased dramatically in price over the last few years. The cost of new cars has risen from a monthly median of $554 in the year 2019 to $667 in 2022. That’s an 18.5% difference. The used cars saw the most dramatic jump, from $391 on average to $515, a 27.4 percentage variation. To best prepare for the cost of owning a carwhether it’s new or used- and can give you an idea of the cost of buying and maintenance costs over 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 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 ownership maintenance costs
$140
$1,371 Monthly payments are based upon the average interest rates for both new and used cars as of Q1 2022 and a 60 month duration. Repair and maintenance costs for during the initial year are based on to Edmunds. The price shouldn’t be the only aspect you consider when selecting the right car. You must also consider factors like depreciation and safety features, as well as reliability and your preferences. Things to consider when purchasing a new car. Buying a brand new vehicle is a less-maintenance investment that is based on the most recent technology. The advantages of buying a new car is equipped with a variety of options that you can choose from when you locate the perfect dealership. Customization: The primary benefit of buying a new car is the possibility of having it customized to suit your needs — you can select the color and style you want and request any add-ons that appeal to you. Current technology: There are practical advantages too — you will get a car that is equipped with the latest technologies as well as safety equipment. Higher interest rates: With an investment in a brand-new car, you are also more likely to get an interest rate that is better on an auto loan than you would with buying a used car typically by a couple of percentage points. Reliability: You don’t have to deal with any hidden mechanical problems in the event that you purchase a new. In addition, you can limit the amount you spend on repairs and maintenance in the first few year of your ownership. The disadvantages of buying a new car, buying new is more expensive and has a few negatives that could cost you your budget. Costlier new cars are typically many thousands of dollars higher than used counterparts, which could cause a down payment or monthly loan payment more expensive to pay for. Also, you’ll have depreciation to consider the amount at which your vehicle loses value. The saying goes that new cars lose value the moment you drive them off the lot. That means that new vehicles will lose 20 percent of their value within the first year. depreciation is continued for at least 10 years following the purchase. Higher insurance costs Newer cars are generally more to insure because of the higher risk of theft, their higher price and other aspects. If you think that this is the best choice for you, plan and look out for . It is important to plan your purchase in advance will help you cut down on initial expenses. Things to consider when purchasing used vehicles usually have the lowest price and depreciate more slowly however they also have other flaws to watch for. Advantages of buying used an used car, you could save money on the monthly payment, insurance and other fees. Plus, depreciation will likely be slower. Consider these key benefits below Cheaper: Used vehicles’ primary benefit is that they are generally cheaper than new counterparts. If you find the exact model you’re looking for a few years old could help you save a couple thousand dollars. Costs and insurance fees are lower: Many pre-owned cars carry lower , titling fees and sales tax. You may save both on the lot and over the car’s life. Depreciation is slower: used vehicles also appreciate slower. Rather than losing 20 percent of its value in its first few years of ownership, the car that is three years old will likely only lose close to 10. Cons of buying used may require you to adjust your priorities when you are ready to purchase your next car and research the history of the car and spend extra funds to maintain the vehicle. Making compromises: You’ll have to search to find the color, style and design you desire. And even then you could have to make compromises. The auto market is extremely competitive and you may not be able to check every mark. Car history: You will also need to check the maintenance history of your vehicle to make sure that the previous owner took good care of it. It’s advisable to bring the vehicle to a trusted mechanic for a checkup — including a brake check and engine test prior to closing any deal. Expect to pay about $100 for the work of the mechanic however it’s worth it. Increased maintenance costs even if the vehicle is in good shape an older car will inevitably need more repairs and maintenance in the future. This could eat into the savings you make from your initial purchase, so be sure to consider your long-term budgeting when selecting new or used. If you’re looking to reduce the cost of your first purchase, a pre-owned car is a great option. But you’ll need to be aware of the expenses in the long run — including repairs and maintenance. Pre-owned certified options If you’re considering buying used but are hesitant about relying on the history of the vehicle it’s an excellent option. A certified pre-owned car is a pre-owned vehicle that has been subjected to a thorough inspection by the dealership or manufacturer. They are an intermediate between used and new vehicles in terms of cost upfront as you’ll be charged in order to get the check. This additional certification is perfect for drivers who want security from a car in mint condition without the price tag of a brand-new vehicle. What should you consider when deciding between a brand new or used car Deciding between a new or used vehicle will come down to factors including factors like your budget and tastes and requirements. Take into consideration these factors when deciding the type of vehicle that is best for you. Budget Multiple costs are often less expensive when you purchase a used vehicle rather than a new one. Everything from dealer charges will be less expensive when you purchase an older vehicle. Depending on the vehicle you select the price of purchase will typically be lower when you buy a pre-owned car. When you crunch the numbers to figure out how much you can afford for a car, look beyond the monthly payment and insurance. Make sure you include annual registration fees, fuel expenses maintenance and repairs. Bells and whistles One of the benefits of buying a new car is that it will include modern technology in safety and technology. What’s more, if being in a position to choose a specific colour or design of the interior is important to you, a new car purchase can make this easier. If you are buying a used vehicle, you may have to spend hours trying to find precisely what you desire. Still, the luxury of selecting the most suitable tires such as a sound system, seating or seating might not be worth the savings of avoiding these extras and purchasing a second-hand. If you are concerned about the safety of the car you’re thinking about buying, use the tools found on the site to verify the safety rating. Maintenance needs A slightly older might have more expensive maintenance costs, which is important to consider if you’re living on a small budget for your household. The majority of the maintenance involved with a brand new vehicle is covered by warranty. However, if you’re considering an old car that’s not longer covered by warranty, it’s not necessarily a deal breaker. You can to get the protection you want. The average extended warranty cost about $1480, however you could spend far more or less, depending on the type of vehicle you own and the protection you choose. How do you find the most affordable deal on your car Whether you decide to buy the new model or used one, keep in mind that researching the vehicle is the most important factor in . Your research should include checking the car’s safety history, insurance costs and the five-year cost-to-own. Try to help make an informed choice. Also, make the effort to test drive various vehicles and talk with a few sellers and get quotes from a variety of . Be sure to get the lowest monthly payment and the most competitive terms for financing to save the most of your hard-earned cash in your pocket. The bottom line Deciding between new and used cars comes down to many factors, including the concern you have about depreciation, budget, your desire to get certain features and how long you plan on having your car. If you’ve got a vehicle you want to purchase, do some research and prior to going to the dealer for the best price. Find out more
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This article is 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. Edited 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 confidence to take control of their finances by providing concise, well-studied facts that break down complex topics into manageable bites.
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