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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 assisting readers with the ins and outs of securely borrowing money to buy a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping their readers to control their finances through providing precise, well-researched, and well-written information that breaks down complicated subjects into digestible pieces. The Bankrate promise
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If you have questions about money. Bankrate can help. Our experts have been helping you master your money for over four decades. We continually strive to give our customers the right advice and the tools required to be successful throughout their financial journey. Bankrate follows a strict policy, which means you can be confident that our content is truthful and accurate. Our award-winning editors and reporters provide honest and trustworthy content that will help you make the right financial decisions. The content we create by our editorial staff is factual, objective and is not influenced through our sponsors. We’re open regarding how we’re in a position to provide quality content, competitive rates, and helpful 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 specific links on our site. So, this compensation can affect the way, location and in what order products are displayed within the categories of listing, except where prohibited by law for our mortgage or home equity products, as well as other home loan products. Other factors, like our own rules for our website and whether the product is offered in your region or within your own personal credit score could also affect the manner in which products appear on this site. Although we try to provide the most diverse selection of products, Bankrate does not include the details of every financial or credit product or service. It’s the decision millions of car owners make each year: Do you buy a brand-new ride or opt for an older car for savings? Making the decision between that brand-new car smell or an older model comes down to more than just cost -however, it’s a crucial element. Driving new costs $716 per month, while the used averages at $526, according to Experian’s for the fourth quarter of 2022. If you’re trying to save money on your initial purchase, a pre-owned car is a great option. But you’ll need to consider the price over the duration of ownership, which includes maintenance and repairs. You may find that buying new is the most cost-effective option to save money. The most important thing to remember
A new purchase is the best option if are looking for the most modern features and cheaper initial maintenance costs. A used purchase might be better if you are willing to sacrifice some features to save on the initial purchase and insurance.
Compare costs: New or. used cars There are a variety of options to check the best deal, brand new or pre-owned. You can find new cars at local dealerships or search on websites such as or Edmunds. Used cars are offered through dealerships, but they are also available (which could be cheaper)- through independent dealers, private-party sellers or superstores like , or . In general, used cars are cheaper than brand new vehicles. However, both have risen dramatically in value over the past few years. New car loans have increased from a monthly median of $554 in 2019 and $667 in 2022, an 18.5 percent difference. Also, used cars experienced the most dramatic jump, from $391 on average to $515 which is a 27.4 percentage difference. For the best way to prepare for the costs of owning a vehicle — new or used — and can give you an idea of costs for purchase and maintenance costs for five years. Here’s the breakdown of prices of Edmunds for a brand new Honda Accord versus a used one. New 2022 Honda Accord EX-L
Pre-owned for 2017 Honda Accord EX-L
Typical listing price
$35,338
$22,895
Estimated monthly payment
$668
$449
Estimated cost of the first year of maintenance expenses
$140
1 371 monthly installments are built upon the average interest rates for both new and used vehicles as of Q1 2022 and a 60 month period. Maintenance and repair costs in the first year of ownership are according to Edmunds. Price shouldn’t be the only aspect you consider when selecting a car. You should also weigh vehicle depreciation and safety features, as well as reliability and your personal preferences. Things to consider when purchasing a new car Buying a new car will require less maintenance with the latest technology. The advantages of buying a new car is equipped with a variety of options — many of which you get to pick when you locate the right dealership. Customization: One of the main benefits of purchasing a brand new car is the possibility of having it outfitted to your preferences You can pick the color and style that you want and request any add-ons that you like. Current technology offers practical benefits too — you will drive off with the latest technology with safety and security features. More favorable interest rates: When you make the purchase of a brand new vehicle it is also more likely to get an interest rate that is better for an auto loan than with an used vehicle purchase, often 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 repairs and maintenance in the first few years of ownership. The disadvantages of buying a new car buying a new vehicle is more costly and has some negatives that could cost you your budget. The cost is higher new cars are typically many thousands of dollars more expensive than older counterparts, which can cause a down payment or monthly loan payments harder to afford. Also, you’ll have depreciation to deal with the amount at which your vehicle loses value. The saying goes that new vehicles lose value when you drive them off the lot. New cars lose 20 percent of their value during the first year of ownership, and depreciation continues over at least 10 years following the purchase. Costs for insurance are higher: New cars often cost more to insure because of their higher chance of theft, greater value and other related elements. If you think that this is the best option for you, you should plan and look out for . Timing your car purchase carefully and could help reduce initial costs. Considerations when buying used Used vehicles typically have a lower price tag and are more depreciating, but they have other issues to be aware of. Benefits of purchasing used an used vehicle, you can save money on the monthly payments, insurance, and other costs. Additionally, depreciation is likely to be slower. Consider the following benefits less expensive: Used vehicles’ primary advantage is that they’re generally less expensive than their new counterparts. The same model you want a few years old could save you some thousand dollars. Lower insurance costs and fees: Many pre-owned cars carry lower fees for titling and sales taxes. You could save money both on the purchase and over the car’s life. Depreciation is slower: used cars also depreciate much slower. Rather than losing 20 percent of their value within the initial year after purchase a three-year-old car would likely only lose around 10 percent. A negative experience with buying used might require you to adjust your list of wants for your next ride, research the car’s history 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 may have to make compromises. The car market is extremely competitive, and you may not be able to check every mark. Car history: You’ll have to also check the maintenance history of your vehicle to confirm it was owned by the original owner who was responsible for the vehicle. It’s advisable to bring the car to a trusted mechanic for a checkup -for example, a brake test and engine test before concluding any deal. Expect to pay about $100 for the mechanic’s efforts however it’s worth it. Increased maintenance costs even if your car is in relatively good condition, a used car will inevitably need more repairs and maintenance in the future. This can eat away at the savings you make from your initial purchase, so be sure to consider your long-term financial plan when choosing new versus used. If you are trying to lower the cost of your initial purchase, a used vehicle is a great option. But , you’ll have to take into account the cost over the life of ownership which includes maintenance and repairs. Certified pre-owned options If you’re considering buying used but are hesitant about relying on the car’s past it’s a great choice. A certified pre-owned car is one that has been subjected to a thorough examination by the dealer or manufacturer. These cars are an equalizer between brand new and used cars in terms of price upfront since you’ll pay extra in order to get the check. This certification adds value for those who need the safety of a vehicle that is in excellent condition without the price tag of a brand-new vehicle. What should you consider when deciding whether to purchase a brand-new or used vehicle Deciding between a brand-new or used car will come down to factors including factors like your budget and tastes and needs. Consider these issues when choosing which one is the best choice for you. Budget multiple costs are usually lower when you buy a used vehicle rather than an entirely new model. Everything from dealer charges is less expensive when you buy a used vehicle. Depending on the vehicle you choose the price of purchase will also typically be less for a used vehicle. When you calculate 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 maintenance and repairs. The bells and whistles one benefit of purchasing an all-new car is that it’ll come with modern technologies as well as safety equipment. Furthermore, if you want to be 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 looking for exactly what you want. But, the benefits 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 vehicle you’re considering using the tools on the to check its safety ratings. Maintenance needs A slightly older may have higher maintenance expenses, which is important to consider if you’re on a tight budget for household expenses. Much of the maintenance associated with a brand new vehicle is covered by warranty. However, if you’re considering a used car that’s no longer covered under warranty, this isn’t necessarily a deal breaker. You can to get the added protection you need. The average extended warranty cost roughly $1,480, but you could spend far more or less, depending on the model of your car and the level of coverage you select. What can you do to get the best price on your vehicle, whether you choose to purchase a brand new or used, remember that research into the vehicle is the most vital element in . Research should include checking the model’s safety record as well as the insurance cost and five-year cost-to-own. Try to help make an informed choice. Also, make the effort to test drive multiple vehicles and shop around with a few sellers and get quotes from a variety of . Ensure that you get the lowest monthly payments and the most competitive terms for financing to save more of your hard-earned dollars in your pocket. The main thing to consider is whether you want new and used cars comes down to several factors, including the concern you have about depreciation, your budget, your determination to have specific features, and the length of time you plan on having your car. When you’ve got a car in mind, shop around prior to heading to the dealer for the most affordable 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 with the ways and pitfalls of borrowing money to purchase an automobile. Written 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 the confidence to control their finances with concise, well-studied facts that break down complex topics into manageable bites.
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