Should I buy a new or used car?
Should you buy a new or used car? When deciding whether it's better to buy a new or used car, you'll need to weigh factors like cost, financing options, features, depreciation, and how long you expect to own the car. We'll help you weigh the pros and cons of buying a used car vs. a new car.
Buying a new vs. used car
Many factors determine whether it's better to buy a new or used car; these include sticker price or MSRP, financing options, insurance costs, and car features.
Sticker price and depreciation
Price is the most obvious difference between a new or used car. Used cars are generally cheaper than a brand-new car. That's mostly because of the car's depreciation — the car's gradual loss of value even if it's well maintained. Many cars lose around 20% of their value within the first year of ownership. They'll continue to depreciate quickly in the first three years or so. After that, the rate of depreciation generally slows down.
The exact depreciation rate of a new vs. used car depends on mileage and maintenance, but also factors like the manufacturer's reputation. The more reliable a particular manufacturer's cars are on average, the less value that brand will lose. Also, luxury cars tend to depreciate faster. Use our car depreciation calculator to estimate how much your vehicle could decrease in value each year.
Financing and flexibility
New cars cost more, but you can typically get better financing offers with lower interest rates. If you finance the same loan amount for a new car as a used model, you could pay less over the life of the loan for the new car because of the lower interest rate.
Buying a used car from a private party will typically be the least expensive option, but they don't come with the same guarantees or warranties as a new car. If you time your purchase right, a dealer may have incentives to cut you a deal on a new car. Private parties may be willing to negotiate, but they don't have sales goals to meet or other reasons to give you a special deal. Learn more about negotiating the best deal for a new car.
Used cars often cost less to insure than new cars, partly because their value is lower. For an older car with a much lower value, you might choose not to carry optional coverages like collision car insurance and comprehensive car insurance, further lowering the cost of insurance. Learn more about insurance for a new car and used car insurance.
Features and safety
New features and safety equipment are introduced every year. Some buyers enjoy having the latest features, while others are content to wait a few years to get them. New cars have the latest and greatest in automotive technology. Used cars have less advanced technology, but you also know what you're getting. Not every new feature is a huge success, and many drivers prefer to wait and see how features perform before purchasing new.
New cars vs. used cars are better equipped with cutting-edge safety tech. Automatic emergency braking, for example, is only available on the newest vehicles.
What you get for the money
Because used cars cost less, buying used vs. new often lets you move up to a different vehicle class. For instance, on the same budget, you might be able to buy a base model new car or a used luxury vehicle with lots of extras. The depreciation of luxury cars, in particular, can make them considerably more affordable after just a few years if you're willing to wait.
Is it worth buying a new car?
When it comes to buying a new or used car, everyone is different. If you enjoy having the latest technology, prioritize cutting-edge safety features, can afford a new car, or want the benefits of a warranty and lower financing rates, a new car may be the way to go.
If you prioritize a lower purchase price, tried-and-true features, and potentially lower insurance and maintenance costs, then a used vehicle may be a better fit. For those on the fence, late-model used cars (those around three to five years old) can offer a good compromise. Learn more about new car buying tips and tips for buying a used car.