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New Cars Vs. Used Cars | U.S. News
New Cars Vs. Used Cars
It can be tough to decide whether to buy a new car or a used car. A used car is generally much cheaper than a comparable new car, but there are lots of other factors to consider, as well. Here's what you need to know.
By Cherise Threewitt
|
Edited by Kristen Hall-Geisler and Cody Trotter
|
Nov. 21, 2024, at 12:27 p.m.
Save
More
New Cars Vs. Used Cars
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Getty Images New Cars vs Used Cars: Making the Best Choice
It can be tough to decide whether to buy a new car or a used car. A used car is generally much cheaper than a comparable new car, but there are lots of factors beside price to consider.
First-time buyers may not have an established credit history, so it may be difficult to get a loan or to get the best interest rates. First-time buyers should also consider leasing, as well as the pros and cons of certified used cars, also known as certified pre-owned or CPO cars. Advantages of Buying New Cars
Many automakers offer bumper-to-bumper new car warranties that cover everything but the powertrain for at least three years or 36,000 miles, though some automakers extend coverage to five years. The basic warranty is typically supplemented with a powertrain warranty, with coverage that extends as long as 10 years or 100,000 miles. Every new car has its warranty included in the price, so go check out our list of the best new car warranties.
When you purchase or lease a new car, you can get the freshest technology available, which may be outdated in a used car that’s even just a few years old. These include smartphone integration systems, such as Apple CarPlay and Android Auto, and big touch screens with quick responses and easy-to-navigate menus. It also means up-to-date safety technology, such as adaptive cruise control, parking assists and advanced collision-avoidance systems. Many new cars also have technology that helps save fuel and improve fuel economy ratings.
Finally, there are often deals on new cars that aren’t available for used cars. These can include cash back deals that directly reduce the car’s price, or financing deals that make it cheaper to get a loan and cost less in interest over the loan term. New cars are often cheaper than used cars to finance because automakers offer deals to get customers into dealerships.
Buying vs. Leasing a Car
It's an age-old question: Should you buy or lease your next car? We'll examine the pros and cons of both and share guidance on how to buy or lease a vehicle.
John M. Vincent and Warren ClarkeNov. 3, 2023
Disadvantages of Buying New Cars
It’s hard to overlook the fact that buying a new car can have some significant disadvantages. As of fall 2024, the average transaction price for a new car was about $49,000. Not only does a new car cost more up front, it will quickly depreciate, meaning that it will lose its value. All cars lose value, but new cars depreciate the fastest. Other costs include a higher sales tax than a less expensive used car would have.
When you’re budgeting for a new car, don’t forget to include interest rates, which will increase your monthly payments and contribute significantly to the total amount you pay for the car. Also consider that your car insurance will likely become more expensive. Not only will basic coverage costs more, but if you have a loan or a lease, your lender will almost certainly require you to carry comprehensive, collision, and gap coverages. Our auto insurance hub can help you find the coverages you need, the car insurance discounts you may qualify for, and how to compare insurance companies.
There are other long-term financial impacts to consider if you buy a new car. Your new car’s warranty will protect you from most major problems for the first several years, but once your new car’s warranty is expired, it will typically be much more expensive to maintain and repair than an older car because of its more advanced technology. Advantages of Buying Used Cars
With a lower up-front purchase price, a used car can be much easier to accommodate in a monthly budget. You can get both lower monthly payments and a shorter loan. Furthermore, you won’t suffer the effects of depreciation as much. Much of a vehicle’s value is lost in its first few years, so purchasing used instead of new lets the first owner absorb the massive depreciation hit, and you get a more affordable car that will depreciate more slowly as it ages. Depreciation is one of the most significant costs of car ownership, though it typically goes unnoticed until it is time to sell the car, when you learn the vehicle’s value.
Shopping for a used car doesn’t mean you have fewer choices. In fact, you may have more, since you may be able to consider vehicles from luxury brands that you couldn’t afford to buy new, or a midsize sedan could fit your budget instead of a compact. Even if you decide to stick with the CPO cars on a dealer’s lot, you’ll have plenty of options, and the CPO status will provide additional peace of mind. You can browse our Best CPO Programs Awards for great options. As the winner of our Best CPO Programs Award, Lexus is a great choice when shopping for a used car.
Used cars will likely save you money when it comes to insurance and taxes. If you take out a loan, be prepared to pay a higher interest rate than you would with a manufacturer-backed financing offer on a new car. But since the interest is on a lower total price, it will be less over the life of the loan. Buying a used car can save on insurance since you may not need expensive optional coverages that are either recommended or required by the lender for a new car. Disadvantages of Buying Used Cars
Keep in mind that someone else has already put a used car through the ringer, and it likely has some issues that the previous owner chose not to deal with. Vehicle history reports are better than ever, but they’re not perfect. Shopping carefully will help, but it won't necessarily prevent every potential problem. Most used cars are sold as-is, so the moment you sign for it, it’s yours, along with whatever problems it may have.
Unlike new cars, which come with automaker-backed coverage, used cars have limited warranty options. Without a warranty, you’ll need to pay out of pocket for necessary repairs, which can be thousands of dollars. A dealership selling used cars will almost certainly offer you an extended warranty at additional cost, but you may also be able to buy similar coverage at a better price through your lender or your car insurance company. That said, if you’re considering buying an extended warranty on a used car at a dealership, that money might be better spent on a CPO car if the automaker's program is a good one. You can learn more by reading our Best CPO Programs Awards.
Finally, be aware of the potential hidden costs of buying a used car. Interest rates are usually higher to finance used cars compared to new cars, depending on your credit history and the vehicle itself. If you’re planning to buy a used car with a loan, shop around and get pre-approved from a bank or credit union before you go to the dealership. The dealership might be able to beat your offer, but you won’t be stuck with whatever they come up with.
How to Decide Whether to Buy a New or Used Car
If you still can’t decide whether to buy a new or used car, assessing your financial situation is a good start. Figure out your total monthly budget for a car payment, including interest. Then look at new and used cars in that price range to see what works for you.
Leasing is a popular way to get behind the wheel of a new car, with lower monthly payments than buying outright. Lease terms are set by the automaker and factor in the amount of depreciation that is expected to occur during the lease term, plus interest and fees. There is often an amount of money due at signing, then equal monthly payments until the lease ends. Keep in mind that you won’t actually own the car, your leasing company does, and contracts are strict about mileage, damage, and wear and tear. Additionally, some luxury automakers offer lease deals on used cars. Leasing can be confusing, so read our guide to leasing a car, which walks you through the steps to lease a vehicle.
How Does Leasing a Car Work?
Leasing a new car is a popular choice, as it allows for lower monthly payments, but if you've never leased a vehicle before, you probably have a lot of questions about the process. In this article, we explain how leasing a car works.
John M. Vincent and Kristen Hall-GeislerOct. 20, 2023
Certified used vehicles combine many of the advantages of both new and used cars. A CPO car is a gently used vehicle that must meet the automaker's criteria for certification, including inspection based on a thorough checklist. They’re usually lease returns or dealership demos that are only a few years old at most, with low miles and no major collisions. CPO cars are a little more expensive than a comparable non-CPO car, but you can still save money compared to buying new. The main big benefit is a factory warranty, along with other potential perks, like roadside assistance. Automakers sometimes offer low-interest financing deals on CPO cars, which you can find on our used car deals page. Frequently Asked Questions
Is it financially better to buy a new or used car?
There are financial advantages and disadvantages to both new and used cars. Buying a new car means you may qualify for lower interest rates, and you may save on factors like maintenance and fuel costs, but a similar used car will be cheaper overall. Are used cars more reliable than new cars?
No. Generally, a new car is likely to be more reliable than a used car, simply because everything is new. Build quality also may be better with a newer vehicle. However, there are plenty of ways to find a reliable used car, such as checking reliability ratings and buying a CPO car. What is the biggest disadvantage of buying a new car?
The cost of a new car is its biggest disadvantage compared to a used car. Why do people buy new cars instead of used cars?
It’s easier to buy a new car from a dealership than a used car from a private party, and it’s also easier to shop at a dealership and find exactly what you want. Shoppers may also take comfort in the fact that a new car doesn’t have an unknown history.
New Cars Vs. Used Cars
It can be tough to decide whether to buy a new car or a used car. A used car is generally much cheaper than a comparable new car, but there are lots of other factors to consider, as well. Here's what you need to know.
By Cherise Threewitt
|
Edited by Kristen Hall-Geisler and Cody Trotter
|
Nov. 21, 2024, at 12:27 p.m.
Save
More
New Cars Vs. Used Cars
More
Getty Images New Cars vs Used Cars: Making the Best Choice
It can be tough to decide whether to buy a new car or a used car. A used car is generally much cheaper than a comparable new car, but there are lots of factors beside price to consider.
First-time buyers may not have an established credit history, so it may be difficult to get a loan or to get the best interest rates. First-time buyers should also consider leasing, as well as the pros and cons of certified used cars, also known as certified pre-owned or CPO cars. Advantages of Buying New Cars
Many automakers offer bumper-to-bumper new car warranties that cover everything but the powertrain for at least three years or 36,000 miles, though some automakers extend coverage to five years. The basic warranty is typically supplemented with a powertrain warranty, with coverage that extends as long as 10 years or 100,000 miles. Every new car has its warranty included in the price, so go check out our list of the best new car warranties.
When you purchase or lease a new car, you can get the freshest technology available, which may be outdated in a used car that’s even just a few years old. These include smartphone integration systems, such as Apple CarPlay and Android Auto, and big touch screens with quick responses and easy-to-navigate menus. It also means up-to-date safety technology, such as adaptive cruise control, parking assists and advanced collision-avoidance systems. Many new cars also have technology that helps save fuel and improve fuel economy ratings.
Finally, there are often deals on new cars that aren’t available for used cars. These can include cash back deals that directly reduce the car’s price, or financing deals that make it cheaper to get a loan and cost less in interest over the loan term. New cars are often cheaper than used cars to finance because automakers offer deals to get customers into dealerships.
Buying vs. Leasing a Car
It's an age-old question: Should you buy or lease your next car? We'll examine the pros and cons of both and share guidance on how to buy or lease a vehicle.
John M. Vincent and Warren ClarkeNov. 3, 2023
Disadvantages of Buying New Cars
It’s hard to overlook the fact that buying a new car can have some significant disadvantages. As of fall 2024, the average transaction price for a new car was about $49,000. Not only does a new car cost more up front, it will quickly depreciate, meaning that it will lose its value. All cars lose value, but new cars depreciate the fastest. Other costs include a higher sales tax than a less expensive used car would have.
When you’re budgeting for a new car, don’t forget to include interest rates, which will increase your monthly payments and contribute significantly to the total amount you pay for the car. Also consider that your car insurance will likely become more expensive. Not only will basic coverage costs more, but if you have a loan or a lease, your lender will almost certainly require you to carry comprehensive, collision, and gap coverages. Our auto insurance hub can help you find the coverages you need, the car insurance discounts you may qualify for, and how to compare insurance companies.
There are other long-term financial impacts to consider if you buy a new car. Your new car’s warranty will protect you from most major problems for the first several years, but once your new car’s warranty is expired, it will typically be much more expensive to maintain and repair than an older car because of its more advanced technology. Advantages of Buying Used Cars
With a lower up-front purchase price, a used car can be much easier to accommodate in a monthly budget. You can get both lower monthly payments and a shorter loan. Furthermore, you won’t suffer the effects of depreciation as much. Much of a vehicle’s value is lost in its first few years, so purchasing used instead of new lets the first owner absorb the massive depreciation hit, and you get a more affordable car that will depreciate more slowly as it ages. Depreciation is one of the most significant costs of car ownership, though it typically goes unnoticed until it is time to sell the car, when you learn the vehicle’s value.
Shopping for a used car doesn’t mean you have fewer choices. In fact, you may have more, since you may be able to consider vehicles from luxury brands that you couldn’t afford to buy new, or a midsize sedan could fit your budget instead of a compact. Even if you decide to stick with the CPO cars on a dealer’s lot, you’ll have plenty of options, and the CPO status will provide additional peace of mind. You can browse our Best CPO Programs Awards for great options. As the winner of our Best CPO Programs Award, Lexus is a great choice when shopping for a used car.
Used cars will likely save you money when it comes to insurance and taxes. If you take out a loan, be prepared to pay a higher interest rate than you would with a manufacturer-backed financing offer on a new car. But since the interest is on a lower total price, it will be less over the life of the loan. Buying a used car can save on insurance since you may not need expensive optional coverages that are either recommended or required by the lender for a new car. Disadvantages of Buying Used Cars
Keep in mind that someone else has already put a used car through the ringer, and it likely has some issues that the previous owner chose not to deal with. Vehicle history reports are better than ever, but they’re not perfect. Shopping carefully will help, but it won't necessarily prevent every potential problem. Most used cars are sold as-is, so the moment you sign for it, it’s yours, along with whatever problems it may have.
Unlike new cars, which come with automaker-backed coverage, used cars have limited warranty options. Without a warranty, you’ll need to pay out of pocket for necessary repairs, which can be thousands of dollars. A dealership selling used cars will almost certainly offer you an extended warranty at additional cost, but you may also be able to buy similar coverage at a better price through your lender or your car insurance company. That said, if you’re considering buying an extended warranty on a used car at a dealership, that money might be better spent on a CPO car if the automaker's program is a good one. You can learn more by reading our Best CPO Programs Awards.
Finally, be aware of the potential hidden costs of buying a used car. Interest rates are usually higher to finance used cars compared to new cars, depending on your credit history and the vehicle itself. If you’re planning to buy a used car with a loan, shop around and get pre-approved from a bank or credit union before you go to the dealership. The dealership might be able to beat your offer, but you won’t be stuck with whatever they come up with.
How to Decide Whether to Buy a New or Used Car
If you still can’t decide whether to buy a new or used car, assessing your financial situation is a good start. Figure out your total monthly budget for a car payment, including interest. Then look at new and used cars in that price range to see what works for you.
Leasing is a popular way to get behind the wheel of a new car, with lower monthly payments than buying outright. Lease terms are set by the automaker and factor in the amount of depreciation that is expected to occur during the lease term, plus interest and fees. There is often an amount of money due at signing, then equal monthly payments until the lease ends. Keep in mind that you won’t actually own the car, your leasing company does, and contracts are strict about mileage, damage, and wear and tear. Additionally, some luxury automakers offer lease deals on used cars. Leasing can be confusing, so read our guide to leasing a car, which walks you through the steps to lease a vehicle.
How Does Leasing a Car Work?
Leasing a new car is a popular choice, as it allows for lower monthly payments, but if you've never leased a vehicle before, you probably have a lot of questions about the process. In this article, we explain how leasing a car works.
John M. Vincent and Kristen Hall-GeislerOct. 20, 2023
Certified used vehicles combine many of the advantages of both new and used cars. A CPO car is a gently used vehicle that must meet the automaker's criteria for certification, including inspection based on a thorough checklist. They’re usually lease returns or dealership demos that are only a few years old at most, with low miles and no major collisions. CPO cars are a little more expensive than a comparable non-CPO car, but you can still save money compared to buying new. The main big benefit is a factory warranty, along with other potential perks, like roadside assistance. Automakers sometimes offer low-interest financing deals on CPO cars, which you can find on our used car deals page. Frequently Asked Questions
Is it financially better to buy a new or used car?
There are financial advantages and disadvantages to both new and used cars. Buying a new car means you may qualify for lower interest rates, and you may save on factors like maintenance and fuel costs, but a similar used car will be cheaper overall. Are used cars more reliable than new cars?
No. Generally, a new car is likely to be more reliable than a used car, simply because everything is new. Build quality also may be better with a newer vehicle. However, there are plenty of ways to find a reliable used car, such as checking reliability ratings and buying a CPO car. What is the biggest disadvantage of buying a new car?
The cost of a new car is its biggest disadvantage compared to a used car. Why do people buy new cars instead of used cars?
It’s easier to buy a new car from a dealership than a used car from a private party, and it’s also easier to shop at a dealership and find exactly what you want. Shoppers may also take comfort in the fact that a new car doesn’t have an unknown history.
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