Purchasing a vehicle often comes with the dilemma of choosing between a new or used car. As we approach the end of the summer season, the current model year is winding down, and enticing offers are being advertised at every turn. In these economically challenging times, does the conventional wisdom still hold true that buying used is cheaper than buying new? Our analysis provides fresh, and sometimes surprising, insights.
As the current model year winds down, enticing offers on new cars abound. But is it still cheaper to buy used? Our detailed analysis of popular 2012-model-year sedans and SUVs compared to their 2010 and 2009 counterparts reveals surprising insights. We crunched the numbers, considering factors like mileage, warranty, and financing rates, to help you make an informed decision. Read on to discover whether a new or used car is the better deal for you.
To help crunch the numbers, we investigated current deals for several popular 2012-model-year sedans and SUVs and compared them to the used-car prices for the same models from 2010 and 2009. In some cases, with a slight increase in monthly payments, you can get a new car without the mileage and with a full dealer warranty.
Here are the differences for a few Consumer Reports recommended vehicles: the Toyota Camry and Honda Accord sedans, and the Acura MDX, Hyundai Santa Fe, and Honda Pilot SUVs. The 2010 models have 28,000 miles, and the 2009 models have 47,000 miles. The payment amount is calculated with the assumption that the buyer puts 10% down on a 5-year loan. For new cars, the price shown is MSRP before incentives; for used cars, the chart shows the list price. Our calculations are based on the average New York City metro-area financing rate of 3.365% for new cars and 3.310% for used cars, according to Bankrate.com.
In examining current financing rates across several metropolitan areas, new car loan interest rates are generally comparable to used car rates. For instance, a new Honda Pilot might cost $505 per month. For an additional $29 per month, totaling $1,766, you could get the new car with zero miles on the odometer and a full 3-year, 36,000-mile warranty.
| Model | Year | Mileage | Monthly Payment | Total Cost Over 5 Years | Warranty |
|---|---|---|---|---|---|
| Honda Pilot | 2012 | 0 | $534 | $32,040 | 3-year, 36,000 miles |
| Honda Pilot | 2010 | 28,000 | $505 | $30,300 | Limited |
| Honda Pilot | 2009 | 47,000 | $386 | $23,160 | Limited |
Opting for a 2009 Pilot might be a better checkbook option, offering higher savings compared to the new car—around $8,000 off and $119 less per month, which can offset the mileage and maintenance. Here, new trumps nearly new, while used is a true way to save money.
The Acura MDX is another example where the 2009 model might be a better bargain. However, in some cases like the Ford Fusion or Honda Accord, for just $100 more per month, you could get away with the new model, as they are either cheaper in anticipation of all-new 2013 models.
When purchase price is a primary focus, do not look solely at the cost to buy, but also consider how much the vehicle will cost you 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 good after all.
These examples illustrate that primarily after the model year ends, the deals available might make it worth buying a new car over a used one, but it is crucial to shop around. There isn't a one-size-fits-all answer that suits all scenarios. Always consider the total cost of ownership, not just the purchase price, to make the most informed decision.
By carefully evaluating your options and considering all factors, you can make a choice that best fits your financial situation and driving needs.
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