When it comes to purchasing a vehicle, one of the most significant decisions you'll face is whether to buy new or used. As we approach the end of the summer season, the 2022 model year is winding down, and enticing deals are popping up everywhere. In these dynamic economic times, does the conventional wisdom still hold true that it's cheaper to buy used rather than new? Our analysis provides fresh, and sometimes surprising, insights.
Deciding between a new or pre-owned car can be challenging, especially with the attractive deals available at the end of the model year. While new cars offer the latest features and full warranties, used cars can provide significant savings. This article delves into the financial aspects of both options, comparing recent deals on popular 2022 models with their 2020 and 2019 counterparts. We also explore the long-term costs of ownership, including depreciation, insurance, and maintenance, to help you make an informed decision.
To break down the numbers, we examined recent deals for several popular 2022 model-year sedans and SUVs and compared them to the used-car prices for similar models from 2020 and 2019. In some cases, with a slight increase in monthly payments, you can get a brand-new vehicle without the wear and tear and with a full manufacturer's warranty.
To illustrate our findings, the table below highlights the differences in costs for five Consumer Reports recommended vehicles: the Ford Fusion and Honda Accord sedans, and the Acura MDX, Ford Escape, and Nissan Pathfinder SUVs.
| Model | Year | Mileage (miles) | Monthly Payment (USD) | New MSRP (USD) | Used Retail Price (USD) |
|---|---|---|---|---|---|
| Ford Fusion | 2022 | 0 | 534 | 25,000 | - |
| Ford Fusion | 2020 | 30,000 | 505 | - | 20,000 |
| Honda Accord | 2022 | 0 | 550 | 26,000 | - |
| Honda Accord | 2019 | 48,000 | 480 | - | 18,000 |
| Acura MDX | 2022 | 0 | 600 | 45,000 | - |
| Acura MDX | 2019 | 48,000 | 520 | - | 35,000 |
Source: Consumer Reports
Our calculations use the average New York metro-area financing rate of 3.365% for new cars and 3.310% for used cars, according to Bankrate. When examining current financing rates in five metropolitan areas, new car loan rates are generally comparable to those for used cars.
The lightly refreshed 2022 Honda Pilot might cost $534 per month, while the 2021 version would run $505. For an extra $29 per month, totaling $1,766 over five years, you get a new car with zero miles on the odometer and a full 3-year, 36,000-mile manufacturer's warranty. However, opting for the 2019 Pilot could be a better financial decision, offering more significant savings with $8,500 off and $119 less per month, which could offset the higher mileage and maintenance costs.
The 2019 Acura MDX might be a better bargain, but in some cases, like the Honda Accord, for less than $100 extra per month, you could drive away with the new model, especially as both are pending all-new 2023 versions.
While the sticker price is a clear focus, don't just look at the cost to buy but also how much the vehicle will cost to own over time. Factors such as depreciation, insurance, financing, fuel costs, and other operating expenses can quickly add up over the years and might make that deal not look so great after all.
New cars typically lose about 20% of their value within the first year and around 60% after five years. In contrast, used cars have already undergone significant depreciation, which can make them a more financially sound choice in the long run.
Insurance rates for new cars are generally higher due to their higher replacement value. Additionally, while new cars come with warranties that cover major repairs, used cars might require more frequent maintenance and repairs, which can add to the overall cost of ownership.
These examples show that especially at the end of the model year, the deals available might make it worth considering a new car over a used one, but it's crucial to do your research. There isn't a single answer that fits all situations. Always consider the long-term costs of ownership, including depreciation, insurance, and maintenance, to make an informed decision.
For more detailed insights, you can refer to Edmunds and Kelley Blue Book.
By considering all these factors, you can make a more informed decision that aligns with your financial situation and driving needs.
How to Instantly Lower Car Windows Using Your Key Fob
Unlocking your car and rolling down the windows before you even get inside can be a game-changer, especially on hot days. This little-known feature, available in many modern vehicles, allows you to cool down your car without having to open the door first. Here's how it works and why you should start using it.
The Ultimate Guide to Instantly Lowering Car Windows with Your Key Remote
On scorching sunny days, the interior of your car can become unbearably hot, regardless of the outside temperature. When you approach your vehicle and find it sweltering, the first thing you likely want to do is lower the windows and crank up the air conditioning. However, did you know there's a convenient feature that allows you to start cooling your car without even getting inside? This feature, which has been around for years but remains unknown to many car owners, enables you to lower your windows using your key remote.
The Best Way to Instantly Lower Your Car Windows Using the Key Fob
Discover a hidden feature in many modern cars that allows you to lower your windows remotely using your key fob. This handy trick can help cool down your vehicle before you even get inside, making those hot summer days a bit more bearable.
