6 Reasons a New Car May Cost You Less Than a Used One
Written by
David Nadelle
Edited by
Jenna Klaverweiden
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During the pandemic, car inventory dropped due to supply chain issues that impacted the availability of semiconductor chips, leading to higher prices on vehicles. As new car supply and sales plummeted, demand for used models increased prices and sales exponentially, leading to some used vehicles costing more than new ones.
In fact, in 2022, the average lightly used vehicle was going for 8.5% above the average new car price, per iSeeCars. Although those price trends have returned to normal, earlier this year, used car prices were still up more than 30% from four years ago, per CoPilot. “The historical depreciation curve doesn’t apply anymore,” said Pat Ryan, CEO of CoPilot, the artificial intelligence-assisted car shopping app.
Generally speaking, buying a new car should be a pricier transaction than buying a used one, but there are exceptions. When you look at things like initial discounts and total ownership costs, buyers are seeing better deals on some new models than they are on used cars sitting on a dealer lot.
Here are six reasons you might be able to score a new car for less than a used one in the months ahead.
Also see five new cars for 2025 that will hold their value.
Lower Financing
While the price of many goods and services has returned to pre-COVID-19 levels, the auto industry is an anomaly unto itself. Typically, financing rates for new cars are substantially less expensive than those normally offered by automakers and dealerships on used cars.
Paying less interest throughout the course of a loan, with a reduced rate, can make monthly payments easier to manage than paying high rates on used cars.
More Incentives
Car prices are decreasing, but we may never see them return to what they were four years ago. In the upcoming months, dealers and manufacturers are more likely to provide incentives on new cars due to healthy inventories on 2024 models.
According to Navy Federal, dealerships typically offer perks when you’re buying a new car, like free services and rebates, whereas used car dealerships generally don’t.
Better Warranties
Whether warranties are worth the upfront cost is up for debate; however, enhanced protection offered by a new car warranty may be a good investment that could save you thousands in repairs and more.
The initial costs may be more than you’re willing to pay (especially if you’re a cautious driver), but car buyers with good credit can benefit significantly from manufacturer-subsidized financing offered on some brand-new models.
Car Longevity
There will come a time when your car will start costing you more than you’d reasonably expect to spend, but with regular maintenance and the advancements in automotive technology, new cars are frequently lasting way beyond 200,000 miles now.
According to U.S. Department of Transportation data, 12.5 years was the average age of a car on the road in the U.S. in 2023. Additionally, most new cars have advanced technology, including driver-assistance and vehicle management systems, that help extend their lives.
Insurance Costs
By and large, insurance premiums are determined by the cash value of your vehicle. Insurance rates for new vehicles are usually higher than for used cars; however, the difference between the two is more modest than you would think and dependent on several factors.
Used automobiles, frequently out of warranty, have a greater chance of needing repairs and maintenance, and they may also cost their owners more in gas, as they tend to be less fuel efficient.
Additional Services and Perks
Roadside assistance packages are often included with new cars, saving you the extra expense of signing up for third-party services and providing you with peace of mind if you run into issues while driving. Plus, it’s common for automakers to offer free maintenance on new cars for the first couple of years, as well as free upgrades like tire rotations or oil changes.
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