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6 minutes read. Published on December 1, 2022.
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers in navigating the details of borrowing money to buy an automobile. The article was 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 gain the confidence to manage their finances with precise, well-researched, and well-written information that breaks down complex topics into manageable bites. The Bankrate promises
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If you have questions about money. Bankrate can help. Our experts have helped you understand your finances for more than four years. We strive to continuously provide consumers with the expert advice and tools needed to be successful throughout their financial journey. Bankrate adheres to strict standards , so you can trust that our content is truthful and accurate. Our award-winning editors, reporters and editors produce honest and reliable content that will help you make the right financial choices. The content we create by our editorial team is factual, objective, and not influenced through our sponsors. We’re honest regarding how we’re able to bring quality information, competitive rates and helpful tools to you , by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for the promotion of sponsored goods and, services, or when you click on specific links that are posted on our site. This compensation could influence the manner, place and when products are displayed within the categories of listing in the event that they are not permitted by law. We also offer mortgage or home equity products, as well as other home loan products. Other factors, such as our own website rules and whether the product is available in your area or at your personal credit score may also influence how and where products appear on this site. Although we try to provide the most diverse selection of products, Bankrate does not include details about every credit or financial product or service. This is the decision that millions of car buyers make each year: Do you buy a brand-new ride or go with an older car to save money? Deciding between that new car smell or an older model will be more than just price — but it’s an important aspect. Driving new costs $716 per month, while the used cars average at $526 according to Experian’s for the fourth quarter of 2022. If you’re trying to lower the cost of your initial purchase, a pre-owned car is a good choice. However, you must consider the costs over the course of ownership, which includes repair and maintenance. It could be that buying new is the better choice to save money. What you should take away
Buying new can be an excellent option 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 some features to lower the initial purchase as well as insurance.
Compare prices: New or. used cars There are a variety of options to check the best deal, brand new or pre-owned. New cars can be found at a local dealership or through search engines like or Edmunds. Used cars can be found through dealerships, but you can also locate them and possibly cheapervia independent dealers, private-party sellers or superstores like , or . In general the case of used cars, they are less expensive than new cars. But both have increased dramatically in value over the past few years. New car loans have increased from a monthly average of $554 in 2019 and $667 by 2022, which is which is an 18.5% difference. The used cars saw the most dramatic jump, from $391 on average to $515 and which is a 27.4 percent variation. To best prepare for the costs of owning a carwhether it’s new or used- and can give you an idea of the cost of buying and maintenance costs for five years. Here’s a price breakdown 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
Price of the typical listing
$35,338
$22,895
Estimated monthly payment
$668
$449
Estimated cost of the first year of maintenance expenses
$140
The $1,371 monthly payments are calculated on average interest rates for both new and used vehicles as of Q1 2022 and a 60-month duration. Repair and maintenance costs for your first year as a new owner are based on to Edmunds. Price should not be the only aspect you think about when choosing a car. It is also important to consider depreciation security features, reliability, as well as your own preferences. Considerations when buying a new car. A brand-new car is a lower-maintenance investment with the latest technology. Pros of buying new A new car is equipped with a variety of options including many that you are able to choose 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 and preferences. You can choose the color and design you prefer and ask for any extras that appeal to you. Current technology: There are practical advantages also — you’ll drive off with the latest technologies with safety and security features. More favorable interest rates: When you make a new car purchase you’re also more likely to get a better interest rate on an auto loan as opposed to an used vehicle purchase usually by a few percentage points. The reliability: You won’t need to contend with any potential issues with your mechanical system when purchasing a brand new. In addition, you can limit the amount you spend on maintenance and repairs in the first few year of your ownership. The disadvantages of buying a new car, buying new is more costly and comes with a few disadvantages that could eat away at your pocket. More expensive new cars are typically hundreds of dollars higher than predecessors that are used, which can make a down payment or monthly loan payments harder to afford. Depreciation: You’ll also have to consider the rate at which your car loses value. The saying goes that new cars lose value when they leave the lot. That means that new cars lose 20 percent of their value within the first year of ownership, and depreciation is continued throughout the first 10 years of ownership. Higher insurance costs: New cars often cost more to insure because of their higher chance of theft, higher value , and other factors. If you do 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. When buying used, you should consider the following considerations. cars typically come with a lower price tag and are more depreciating, however they also have other flaws to be aware of. Advantages of buying used an used car, you will reduce the cost of your monthly payment, insurance and other charges. Additionally, depreciation is likely to happen at a slower rate. Take a closer look at these key benefits below: Less expensive The primary benefit is the fact that they are generally less expensive than their new counterparts. Getting the same model you’re interested in a couple of years old could help you save some thousand dollars. Lower insurance costs and fees Some pre-owned vehicles have lower fees for titling 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 cars also depreciate much slower. Rather than losing 20 percent of its value in the first year of ownership, an older car of three years would only lose close to 10 percent. A negative experience with buying used might require you to adjust your wish list for your next ride and research the history of the car and invest additional funds to maintain the vehicle. Making compromises: You’ll need to look for the style, color and you want. In the end you could need to compromise. The market for cars is highly competitive at the moment, and you may be unable to tick every mark. Car history: You’ll be required to verify the car’s maintenance records to confirm it was owned by the original owner who was responsible for it. It’s wise to bring the vehicle to a reputable mechanic for a checkup -for example, a brake test and engine test prior to closing any deal. It is possible to shell out around $100 for the work of the mechanic, but it is well worth the cost. More expensive maintenance costs even if your car is in decent condition an older car will require more maintenance and repairs over time. This could reduce the savings you make from the initial purchase, so you should consider your long-term budget when deciding between new or used. If you’re trying to save money on your initial purchase, a used car is a good choice. But you’ll need to be aware of the expenses in the long run that includes repairs and maintenance. Certified pre-owned alternatives If you’re thinking of purchasing used, but aren’t sure about relying on the car’s past it’s an excellent option. A certified pre-owned vehicle is a pre-owned vehicle which has passed a rigorous inspection by either the dealer or the manufacturer. These vehicles are considered to be a middle ground between brand new and used cars in terms of cost upfront because you’ll have to pay for the inspection. This extra certification is ideal for those who need the security of a car that is in good condition, but without the price tag of a brand new vehicle. Which is the best way to decide whether to buy a new or used vehicle Deciding between a brand-new or used vehicle will come down to factors including the financial aspect and your preferences and requirements. Consider these issues when choosing which type of purchase is right for you. Budget Multiple costs are typically lower when you buy a used vehicle rather than a new one. Everything from the to dealer charges is less expensive when you buy a used vehicle. The vehicle you select the cost of buying it will typically be lower for a used car. When you calculate the numbers to determine how much you can afford for a car take a look beyond the monthly payment and insurance. Be sure to include annual registration costs, fuel expenses maintenance and repairs. Bells and whistles One of the benefits of buying an all-new car is that it will include the most recent technologies 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, then a new car purchase can make this easier. If you are buying a used vehicle it is possible to spend a long time trying to find exactly what you want. Still, the luxury of selecting the most suitable package for tires such as a sound system, seating or seating may not outweigh the savings of avoiding these extras and purchasing a used. If you are concerned regarding the safety of the vehicle you’re considering you should use the tools available on the site to verify whether it has a safety score. Maintenance needs A slightly older could have higher maintenance costs, which is a crucial consideration when you have a limited household budget. The majority of the maintenance involved with a brand new vehicle is likely to be covered under warranty. However, if you’re considering a used car that’s no longer covered by warranty, it’s not a deal breaker. You may be able to obtain the added protection you need. The average extended warranty cost about $1480, however you can pay higher or lower, depending on the model of your car and the level of coverage you choose. How do you find the most affordable deal on your car Whether you choose to purchase a brand the new model or used one, you must remember that research into the vehicle is the most vital element in . Your research should include checking the safety rating of the vehicle as well as the insurance cost and five-year cost-to-own. It is important to consider these factors when making the right choice. You should also consider a test drive of various vehicles and talk with a few dealers and get quotes from a variety of . Make sure you are getting the lowest monthly payments and the most competitive terms for financing to save more of your hard-earned money in your pocket. The final decision between new and used is a matter of balancing to several factors, including the concerns you have regarding depreciation, budget, determination to have specific features, and the length of time you’re hoping to own your car. If you’ve got a vehicle in your mind, research and prior to going to the dealer, make sure you get the most affordable price. Learn more
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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the details of borrowing money to purchase cars. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are dedicated to helping readers gain confidence to manage their finances with precise, well-researched and clear details that cut complicated topics into digestible pieces.
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