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Some finance gurus love to say it: Never buy a new car.
The logic is simple: New cars lose value the second you drive them off the lot, so buying used is “always the smarter financial choice.”
But here’s the thing: I’ve bought two new cars in my life. I’m a personal finance expert. And both times, I ran the numbers, and buying new felt like the better deal for me.
Most recently, I bought a new car in April 2025 and financed it through Kia at 2.65% APR for 60 months. I also negotiated over $6,000 off the listed purchase price.
Meanwhile, the average used car APR was 11.87% in early 2025, according to Experian. That’s a massive difference in interest costs — and one that tipped the math in favor of buying new.
So… is buying used really always cheaper? Let’s break it down together.
Buying new gets a bad rap, but it can make a lot of sense if you have great credit and can qualify for manufacturer financing.
Low APRs. In 2025, new car loans average 6.73%, but some car manufacturers offer rebates or special financing rates as low as 0% for buyers with excellent credit. That’s a lot less than the average used car rate of 11.87%.
Warranties. New vehicles often come with a full manufacturer’s warranty and more maintenance and additional perks.
Peace of mind. With a new vehicle, it’s yours and yours alone from day one. You don’t have to worry about a mysterious history or surprising smells.
Used cars are the go-to recommendation by some finance experts for a reason. And in many cases, they really are the more affordable choice.
For instance, buying used might be the smarter move if:
You’re paying in cash. If you don’t need to finance, you skip the average 11.87% APR altogether. You might even be able to haggle the price of the vehicle itself.
You want to avoid depreciation. New cars lose about 30% of their value in the first two years. Buying used means someone else already took that hit.
You’re looking at certified pre-owned models. CPO vehicles often have lower mileage and come with warranties and inspection guarantees, so you have a sort of middle ground between “brand new” and “sketchy Craigslist find.”
Your credit score isn’t high enough for manufacturer financing. If you’re not eligible for low-APR deals on new cars, a used car may cost less in the long run. Even if the APR is higher, the loan amount may be small enough to still save you money.
Whether new or used, the real question isn’t what’s cheaper upfront — it’s what costs less over the long haul. Here’s what to think about when comparing new vs. used:
Here’s how a higher APR can make a used car cost more in the end:
Let’s say you finance a used car for $22,000 at 11.87% APR (that early 2025 average). Over five years, you’d pay around $7,300 in interest — or $29,270 overall.
Now, let’s say you finance a new car for $27,000 at 2.65% APR. Over five years, that’s around $1,850 in interest — or $28,850 overall.
Used cars may need tires, brakes, transmission work or other major services sooner. Even if the initial sticker price is lower, those repair costs can creep up fast.
New vehicles often cost more to insure and register, so factor that into your monthly budget. An eight-year-old car typically costs 25% less to insure than when it first rolled off the lot.
If you plan to sell the car in a few years, check how well it holds value. New cars drop about 30% in the first two years alone, then keep sliding up to 12% each year. Some new cars — like Toyotas, Hondas and Subarus — depreciate more slowly than others, and may be worth more later.
If you have excellent credit, plan to keep the car for a long time and can qualify for low manufacturer financing, buying new could save you more in the long run — especially when you factor in the lower interest, warranty coverage and negotiating potential.
But if you’re paying cash, want to avoid depreciation or just need something reliable without the frills, a used car might be the better choice, particularly if you’re not eligible for the best new car APRs.
I’ve bought new twice. And for me, both times felt like the right choice for my situation and budget. But that decision wasn’t based on “gut instinct” or standard financial advice. I ran the math.
So should you.
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