Should I buy a new or used car?
Here are helpful tips on deciding between a new or used car:
- Calculate car trade-in value.
- Use an auto loan payment calculator.
- Calculate the car depreciation.
- When to consider buying a new car
- When to consider buying a used car
Calculate car trade-in value.
Many dealerships will credit you cash towards a new car purchase, if you trade in your old car. However, be aware that the trade-in value is unlikely to be the full value of your old car, as the dealership will need to sell your used car to make a profit.
As an alternative, you could sell your old car yourself and use those funds towards a new car. This will be more time-intensive than making a trade-in, but likely will result in you getting a better price.
Either way, you should get an estimate of your car’s value by using an online valuation tool, or talking to a few dealerships directly about the trade-in value they would give you on your car.
Use an auto loan payment calculator 1.
How much car can you afford? An auto loan payment calculator can help you estimate your monthly payments, provided that you know how much money you can put down and how much your current car is worth.
Auto loan terms and rates may vary depending on multiple factors including, but not limited to, credit score, debt-to-income ratio and past credit performance. This estimate may help you understand your car shopping price range.
Calculate the car depreciation.
Cars lose value over time. This is known as depreciation. How do you calculate depreciation of a car? To calculate it, look at older models similar to the car you want to buy. How much did the new car cost? What could a used version be purchased for now? This difference gives an estimate of the value a particular model will lose over time.
A new car may be more fun to drive, but you should be aware that you’re paying a premium to do so. The older a car, the slower its depreciation, so used cars typically lose much less value than new cars.
When to consider buying a new car:
- You are willing to pay a premium for buying new
- You value the latest technology and safety features
- You want a factory warranty
- You value the likelihood of no hidden maintenance or repair issues
When to consider buying a used car:
- You want to avoid the quick depreciation of new cars
- You would like to keep your overall costs at a minimum
- You prefer the potentially lower insurance rates and registration costs of a used car
- You are comfortable with a certified pre-owned car
Explore your auto loan options. We’ll help find a car loan that fits.
Helpful articles on the car buying process
Know what to look for in financing a new or used car.
Finding the right financing plan for your new car can make a big difference in your payments.
Get answers to common questions and concerns for parents of teen drivers on purchasing a car.