New vs Used Car Calculator

In most cases, buying a 2-4 year old used car with low mileage is cheaper over any 5-year ownership period. A new car loses roughly 20% of its value in the first year and 40-50% by year 3 (depreciation that the original buyer absorbs). Buying used avoids this steep early depreciation. However, used cars may have higher maintenance costs, less favourable financing rates, shorter warranty protection, and fewer safety features.

According to the Kelley Blue Book and NADA data, new vehicles depreciate approximately 15-25% in the first year and 10-15% per year in years 2-5, though the exact rate depends heavily on make, model, fuel type, and market conditions. Popular trucks and SUVs depreciate more slowly. High-end luxury vehicles and some electric vehicles depreciate faster. After 5 years, most new cars are worth 35-50% of their original MSRP.

Typically no. Insurance premiums are based largely on the vehicle's market value (replacement cost). A used car worth less than a new equivalent will generally cost less to insure for comprehensive and collision coverage. However, if the used car has poor safety ratings or is a model with high theft rates, premiums can be disproportionately high. Liability and PIP coverage costs are similar regardless of vehicle age.

New car financing rates are typically 1-2 percentage points lower than used car rates because manufacturers offer subsidised rates through captive finance arms, and lenders view new cars as lower risk. As of 2025, average new car loan rates run 5-7% APR while used car rates average 8-12% APR depending on credit score. A certified pre-owned (CPO) vehicle from a manufacturer dealership may qualify for rates closer to new car financing.

A CPO vehicle is a used car that has been inspected, refurbished to manufacturer standards, and certified by the manufacturer or dealership. CPO vehicles typically come with an extended manufacturer-backed warranty, roadside assistance, and sometimes better financing rates. They cost more than non-CPO used vehicles (typically $1,000-3,000 premium) but provide more peace of mind. CPO programs vary significantly by manufacturer in terms of what is covered.