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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 specializes in helping readers to navigate the ins and outs of securely borrowing money to purchase cars. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping their readers gain the confidence to manage their finances through providing clear, well-researched facts that break down complicated topics into bite-sized pieces. The Bankrate promise
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New is often an excellent option if you want the latest features and lower maintenance costs at the beginning. A used purchase might be better when you’re willing to compromise certain features in order to save money on the initial purchase as well as insurance.
Compare prices: New or. used vehicles There are a variety of options to check the best deal, new or used. New cars can be found at a local dealership or by searching on sites like or Edmunds. Used cars are offered through dealerships, however, you can also find them — potentially cheaper -via independent dealers and private-party sellers, or through superstores such as . In general, used cars are cheaper than new cars. However, both have seen a dramatic increase in price over the last few years. New car payments have jumped from a monthly average of $554 in 2019 and $667 in 2022, an 18.5 percentage difference. Used cars also saw an astronomical increase from $391 to $515 which is which is a 27.4% difference. To best prepare for the cost of owning a careither used or new -and give you an idea of costs for purchase and five-year maintenance costs. Here’s the breakdown of prices from 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 cost of the first year of ownership maintenance costs
$140
The $1,371 monthly payments are calculated on the average interest rates for both new and used vehicles in Q1 2022 and a 60 month duration. Repair and maintenance costs in during the initial year is according to Edmunds. Price should not be the only factor that you take into consideration when selecting an automobile. It is also important to consider depreciation, safety features, reliability and your preferences. Considerations when buying a new car Buying a new car is a lower-maintenance investment 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 dealership. Customization: The main benefit of buying a new vehicle is that you can get it fitted to your personal preferences and preferences. You can choose the color and style that you want and request any add-ons that you like. Technology advancements: There are practical advantages also — you’ll be driving away with the most recent technology with safety and security features. Higher interest rates: With an investment in a brand-new car you’re also more likely to get an interest rate that is better when you take out an auto loan as opposed to an used vehicle purchase, often by a few percentage points. Reliability: You won’t have to contend with any potential undiscovered mechanical issues when purchasing a brand new. Plus, the should limit your spending on maintenance and repairs in the initial year of your ownership. Cons of buying new Unfortunately, buying new is more costly and has some disadvantages that could eat away at your budget. The cost is higher The newer cars are usually several thousands of dollars higher than predecessors that are used, which can cause a down payment or monthly loan payment more expensive to pay for. Also, you’ll have depreciation to contend with , or the rate at which your car decreases in value. According to the old saying, new cars lose value as soon as they leave the lot. That means that new cars lose 20 percent of their value within the first year, and depreciation continues over the first 10 years of ownership. Costs for insurance are higher: New cars often cost more to insure due to their greater risk of theft, higher price and other factors. If you choose that it 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 expenses. Considerations when buying used Used cars typically come with the lowest price and are more depreciating, but have other shortcomings to watch for. Advantages of buying used a used car, you will save money on your monthly installment, insurance and other costs. Plus, depreciation will likely be slower. Have a look at the following benefits Cheaper The main advantage is that they are generally cheaper than new counterparts. The same model you’re interested in a couple of years old could help you save a couple thousand dollars. Costs and insurance fees are lower Some pre-owned vehicles have less titling, registration and sales tax. You could save money both on the purchase and over the course of the car’s lifespan. Depreciation is slower: used cars also depreciate much slower. Rather than losing 20% of its value within the initial year after purchase an older car of three years would just lose 10 percent. The negatives of purchasing used could require you to adjust your list of wants when you are ready to purchase your next car look up the car’s history and put aside money to keep the car in good condition. Making compromises: You will need to look for the color, style and design you’re looking for. Even then, you may have to make some compromises. The car market is extremely competitive right now and you may not be able to check every mark. Car history: You will also need to check the vehicle’s maintenance record to make sure that the previous owner was responsible for it. It is recommended to take the vehicle to a reputable mechanic for a routine checkupwhich includes a brake inspection and engine test — prior to closing any deal. You can expect to pay about $100 for the mechanic’s efforts however, it’s worth the cost. Increased maintenance costs even if your car is in relatively good condition, a used car will eventually require repairs and maintenance over the course of time. This can eat away at the savings you earn from your initial purchase, so consider your long-term budget when deciding between new versus used. If you’re trying to reduce the cost of your first purchase, a used car is a great option. But , you’ll have to take into account the cost throughout the duration of ownership which includes repairs and maintenance. Certified pre-owned alternatives If you’re leaning toward purchasing a used car but are uncertain about relying on the car’s past it’s an excellent option. A certified used car is a used car that has undergone a complete inspection by the dealership or the manufacturer. These cars 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 extra certification is ideal for a driver who wants the safety of a vehicle in mint condition without the price tag of a brand-new vehicle. Which is the best way to decide whether to purchase a brand-new or used vehicle Deciding between a brand-new or used car comes down to a variety of factors, including the financial aspect and your preferences and requirements. Be aware of these aspects when choosing the type of vehicle that is best for you. Budget Multiple costs are typically cheaper when you buy a used vehicle rather than an entirely new model. Everything from the to dealer charges will be less expensive when you buy a used vehicle. Depending on the vehicle you choose the cost of buying it will also typically be less for a used vehicle. When you calculate the numbers to determine much car you can afford, look beyond the monthly installment and insurance. Include annual registration costs, fuel expenses, maintenance and repairs. Bells and whistles One of the benefits of buying a brand new vehicle is that it’ll come with the most recent technologies and safety features. Furthermore, if you want to be capable of choosing a particular car color or interior finish is important to you, a new car purchase will help you achieve this. When purchasing a used car you might have to do a lot of searching to get the exact car you want. But, the benefits of selecting the most suitable package for tires and sound system, or even seating might not be worth the cost savings by avoiding these extras and purchasing a second-hand. If you’re concerned about the safety of the vehicle you’re looking at using the tools on the website to determine its safety ratings. Maintenance needs An older model could have higher maintenance costs, which is important to consider if you’re living on a small budget for household expenses. Much of the maintenance associated with a brand new vehicle 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 necessarily an issue. It’s possible to get the added protection you need. The average extended warranty cost about $1480, however it is possible to pay much higher or lower, depending on the model of your car and the amount of protection you choose. How do you find the most affordable bargain on your car, regardless of whether you decide to buy new or used, remember that conducting a thorough research on the car is the most crucial element in . Research should include checking the safety rating of the vehicle as well as the insurance cost and the cost-to-own for five years. Make sure to assist you in making a decision. It is also advisable to take the time to test-drive several vehicles and compare prices with a few dealers, getting quotes from several . Be sure to get the lowest monthly cost and the most competitive financing terms to ensure that you keep more of your hard-earned money in your pocket. The bottom line Deciding between new and used cars comes down to several factors, including the concern you have about depreciation, your budget, your decision to purchase certain features and how long you plan on having your vehicle. Once you have a car in mind, shop around and before you head to the dealer for the best price. 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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers in navigating the details of borrowing money to purchase an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers gain the confidence to control their finances by providing concise, well-studied facts that break down complicated topics into digestible pieces.
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