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New Vs. Used Car Calculator

Nov 06, 2024

The average used car costs less than the average new car by about two-thirds. But cost isn’t everything. New cars have manufacturer warranties and modern features that some used cars lack. An older used car may not be able to keep up with people who put a lot of miles on their car. Consider the amount you drive, how long you plan on keeping the vehicle, the current and future value of the vehicle and your lifestyle. To find out if financing a new or used vehicle is right for you, answer the following questions for tailored advice. 

New cars depreciate in value significantly during the first two years of ownership. Which best describes your view regarding your car's depreciation?
Which best describes your monthly budget for a car?
Approximately how many miles do you drive each year?
Which best describes your view regarding the optional features of your car?
Which best describes your ability to maintain your car?
Which best describes your view regarding warranty protection?
How long do you expect to own your car?

Recommendation: Both used cars and new cars can have advantages for you. However, we think that a NEW car will probably be better for you.

Here's why: We considered each of your answers and weighed each based on the experience of our experts.

Monthly budget: Used cars cost less than new cars. Also, they cost less to insure. Although the interest rate on a loan for a used car may be higher than the rate for a new car, the lower price of the used car and its lower insurance cost will most likely require a significantly lower monthly outlay from you. Because you said you want the smallest monthly payments possible, a used car is a good option for you.

Your annual miles: In general, new cars are better able to withstand a lot of annual mileage because they have no wear and tear to begin with. You indicated that you plan to drive just 10,000 miles or fewer each year, which is less than average. So, this indicates that a good used car may be more than adequate for your needs.

Your duration of ownership: New cars are considered a better buy for people who plan to keep their car longer than the average term of ownership, which is four to six, years according to the National Automobile Dealer's Association. You said that you plan to keep your car for less than four years, so this indicates that a used car may suit your needs well.

Your desire for options: With a new car, you have more choices. You can ask a dealer to provide you with exactly what you want -- from the color and engine size, to the dashboard layout and the shape of the floor mats. However, you indicated that you are not too particular about options, so this points in favor of a used car for you.

Your ability to maintain a car: New cars tend to require less maintenance. You indicated that you don't know much about maintaining a car. This points in favor of a new car for you because a new car is less likely to give you problems and it will have better warranty protection.

Your interest in warranty protection: New cars come with strong warranties (although they also have some limitations). And both the dealer and manufacturer have more obligations to you if something goes wrong with your new car. Used cars can have warranties, but they don't provide the coverage that new cars get. You indicated that you are not too concerned about warranty protection, so this points in favor of a used car for you.

Your viewpoint regarding depreciation: You said that you'll spend what you need to get the car you want. This indicates that a key advantage of used cars -- lower purchase price -- is not a key priority of yours.

Should you get a new or used car?

At the simplest level, buying used instead of new will cost you less money. But buying used may also mean compromising on the newest available features. Purchasing new can be a good choice if you are comfortable spending a bit more money and want the most advanced features and lower initial maintenance costs.

Considerations when buying new 

New vehicles often have better interest rates and the option to customize your purchase to your needs. You may also find new tech that makes your ride safer, more reliable and more efficient. But new vehicles cost more, have more expensive car insurance and depreciation more quickly than similar used cars.

When shopping for new vehicles, be sure to research your purchase and test drive different versions of the models you are interested in before making a final decision.

Considerations when buying used

A used car comes with potentially higher maintenance costs and its driving history may include undisclosed issues or accidents. It may also become increasingly expensive to maintain as the car gets older and parts stop being manufactured. But it will be less expensive to purchase, may have lower insurance rates and depreciate more slowly than a new car. 

When shopping for a used car, consider a certified pre-owned option. A CPO car will have a lower price tag than a new car, but a higher pricetag than a non-CPO version of the same vehicle. However, the manufacturer's thorough inspection process — and specialized warranty — will assure that you are buying a well-cared-for vehicle.