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6 minutes read. Published December 01, 2022
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the ins and outs of securely borrowing money to buy cars. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping their readers gain the confidence to take control of their finances through providing concise, well-researched and accurate information that breaks down otherwise complicated topics into bite-sized pieces. The Bankrate promise
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You have money questions. Bankrate can help. Our experts have been helping you master your money for more than four decades. We strive to continuously provide consumers with the expert advice and the tools required to succeed throughout life’s financial journey. Bankrate adheres to strict standards policy, which means you can be confident that our information is trustworthy and reliable. Our award-winning editors and reporters provide honest and trustworthy content that will help you make the right financial choices. The content we create by our editorial team is factual, objective and is not influenced from our advertising. We’re open about the ways we’re in a position to provide quality content, competitive rates, and helpful tools to you by explaining how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products andservices or when you click on certain links posted on our website. So, this compensation can influence the manner, place and when products appear within listing categories and categories, unless it is prohibited by law. We also offer mortgage or home equity products, as well as other home lending products. Other factors, such as our own rules for our website and whether or not a product is offered in your area or at your own personal credit score may also influence how and where products appear on this website. We strive to offer an array of offers, Bankrate does not include details about each financial or credit item or service. It’s the decision millions of car buyers take each year: Should you purchase a brand-new car or opt for an older car to save money? Deciding between that new car smell or a used car will be more than just price -however, it’s a crucial aspect. The cost of a new car is $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 reduce the cost of your first purchase, a used car is a good choice. However, you must consider the cost over the life of ownership, which includes the maintenance as well as repairs. You may find that buying new is the best 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. Buying used might fit better if you are willing to compromise on certain features in order to save money on the initial purchase as well as insurance.
Compare the costs of new or. used cars There are options for scouting for your next purchase, brand new or pre-owned. There are new cars available at a local dealership or search on websites like or Edmunds. Used cars can be found at dealerships, however you can also locate them — potentially cheaper — through independent dealers as well as private-party sellers and superstores such as . In general the case of used cars, they are less expensive than new cars. However, both have risen dramatically in cost over the past few years. New car loans have increased from a monthly median of $554 in 2019 to $667 in 2022, which is an 18.5 percentage difference. The used cars saw an astronomical increase from $391 to $515, a 27.4% variation. In order to be prepared for the expense of owning a vehicle -whether it’s new or used- and can give you a sense of purchase costs and maintenance costs over five years. Here’s a breakdown of the price of Edmunds for a brand new Honda Accord versus a used one. New 2022 Honda Accord EX-L
Refurbished in 2017 Honda Accord EX-L
The typical listing price
$35,338
$22,895
Estimated monthly payment
$668
$449
Estimated first year of ownership maintenance costs
$140
$1,371 Monthly payments are based on average interest rates for new and used vehicles as of Q1 2022, and a 60-month term. Repair and maintenance expenses in the first year of ownership are according to Edmunds. Price should not be the only factor you consider when selecting an automobile. You must also consider factors like depreciation security features, reliability, and your preferences. Things to consider when purchasing 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 wide range of features including many that you get to pick if you can find the right dealer. Customization: The main benefit of buying a new vehicle is that you can get it customized to suit your needs and preferences. You can choose the color and style that you prefer and ask for any extras that you like. Current technology is a practical benefit too — you will be driving away with the most recent technology with safety and security features. Higher interest rates: With a new car purchase you’re also more likely to get the best interest rate on an auto loan than with a used car purchase, often by a few percentage points. Reliability: You won’t have to worry about any issues with your mechanical system when purchasing a brand new. In addition, you can limit the amount you spend on repairs and maintenance in the initial year of your ownership. The disadvantages of buying a new car buying a new vehicle is more expensive 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 used counterparts, which could cause a down payment or monthly loan payments more difficult to manage. Depreciation: You’ll also have to consider the rate at which your car decreases in value. The saying goes that new cars are worthless when you take them off the lot. that new vehicles will lose 20 percent of their value during the first year. depreciation will continue throughout at least 10 years following the purchase. More expensive insurance costs Newer cars are generally more to insure because of their greater risk of theft, their higher value and other related elements. If you think that this is the best choice for you, make sure you plan your budget and be aware of . It is important to plan your purchase in advance and could help reduce initial costs. Things to consider when purchasing used vehicles typically have the lowest price and are more depreciating, but they have other issues to watch for. Advantages of buying used a pre-owned vehicle, you can save money on your monthly installment, insurance and other charges. Plus, depreciation will likely happen at a slower rate. Have a look at these key benefits below less expensive The main benefit is the fact that they are generally cheaper than new counterparts. The same model you’re looking for a few years old could help you save a couple thousand dollars. Lower insurance costs and fees Some pre-owned vehicles have lower , titling fees and sales taxes. You may save both on the purchase and over the course of the car’s lifespan. A slower depreciation rate: Older vehicles also appreciate more slowly. Rather than losing 20 percent of their value within the first year of ownership, an older car of three years would just lose 10 percent. Cons of buying used may make you adjust your wish list to make your next purchase look up the car’s history and spend extra funds to keep the car in good condition. Making compromises: You’ll need to look for the design, color and style you’re looking for. In the end, you may have to make some compromises. The market for cars is highly competitive at the moment, and you may not be able to check every box. The car’s history: You’ll be required to verify the maintenance history of your vehicle to confirm you know that previous owners was responsible for it. It’s wise to bring the car to a trusted mechanic for a checkup -for example, a brake test and engine check before closing any deal. It is possible to shell out around $100 for the mechanic’s efforts however, it’s worth the cost. Increased maintenance costs even if your car is in good shape an older car will require more repairs and maintenance in the future. This could reduce the savings you earn from your initial purchase, so consider your long-term budget when deciding between new or used. If you are trying to reduce the cost of your first purchase, a pre-owned car is a good choice. However, you must take into account the cost over the life of ownership — including maintenance and repairs. Certified pre-owned alternatives If you’re thinking of buying used but are hesitant about relying on the car’s past, a vehicle is an excellent choice. A certified pre-owned vehicle is a used car that has been subjected to a thorough inspection by either the dealer or manufacturer. These cars are an equalizer between used and new vehicles in terms of upfront price because you’ll have to pay to have the vehicle inspected. This additional certification is perfect for a driver who wants the security of a car that is in good condition, but without the price tag of a brand new vehicle. How to choose whether to buy a 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 requirements. Consider these issues when choosing which one is the best choice for you. Budget multiple costs are usually cheaper when you buy an used car rather than buying a brand new one. Everything from dealer fees is less expensive when you buy a used vehicle. Depending on the vehicle you choose the price of purchase is usually lower for a used vehicle. If you are calculating the numbers to figure out how you can afford a car, look beyond the monthly installment and insurance. Be sure to include annual registration fees, fuel expenses, maintenance and repairs. Bells and whistles One advantage of buying a brand new vehicle is that it comes with the most recent technologies in safety and technology. What’s more, if being in a position to choose a specific car color or interior finish is important to you, then 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 exactly what you want. But, the benefits of choosing the right tire package and sound system, or even seating may not outweigh the cost savings by avoiding these accessories and instead purchasing used. And if you have concerns about the safety of the vehicle you’re looking at, use the tools found on the website to determine the safety rating. Maintenance needs A slightly older might have more expensive maintenance costs, and this is important to consider if you have a limited household budget. Much of the maintenance associated with a brand-new car is covered by warranty. However, if you’re considering an old car that’s not longer covered under warranty, it’s not a deal breaker. You can to get the extra protection you require. The average extended warranty cost about $1480, however you could spend far higher or lower, depending on the type of vehicle you own and the amount of coverage you select. What can you do to get the best deal on your car Whether you opt to buy a either used or new, remember that conducting a thorough research on the car is the most important factor in . Research should include checking the safety rating of the vehicle as well as the insurance cost and the five-year cost-to-own. It is important to consider these factors when making a decision. You should also make the effort to test drive various vehicles and talk with a couple of sellers and get quotes from a variety of . Make sure you are getting the lowest monthly cost and most competitive financing terms to save more of your hard-earned money in your pockets. The final decision between new and used comes down to a variety of factors, such as your concerns around depreciation, your budget, your determination to have certain features and how long you’re hoping to own your vehicle. If you’ve got a vehicle in your mind, research prior to heading to the dealer, make sure you get the best deal. Learn more
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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 ways and pitfalls of borrowing money to purchase an automobile. 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 clear, well-researched details that cut complicated subjects into bite-sized pieces.
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