Five-year comparison

Cost or constraint

New car: $34,000, resale $18,000

Timing or value

Three-year-old used car: $24,000, resale $11,000

Cost or constraint

New depreciation: $16,000

Timing or value

Used depreciation: $13,000

Cost or constraint

A $3,000 gap can be erased by financing, repairs, tax or trim differences

Keep the time period, usage and exit point consistent across both choices.

Compare the alternatives on equal terms

Match service, not badges

Compare vehicles that meet the same capacity, safety and reliability requirement. A cheaper car that cannot perform the job is not an alternative.

Use transaction prices

Include tax, fees, immediate reconditioning and any new-car rebate or used-car certification premium.

Estimate age-specific upkeep

Separate scheduled maintenance, wear items and repair uncertainty. Warranty reduces certain cash risk but does not eliminate depreciation or consumables.

Exit on the same date

Estimate both resale values at the common horizon and subtract remaining loan payoff separately.

This decision belongs in The Real Cost of Car Ownership. Use Car Depreciation: Measure the Cost You Do Not Pay Monthly to check the next assumption, then test the numbers in the Car Ownership Cost Calculator.

Make both options comparable

Compare vehicles that meet the same transport need and use actual transaction prices. Financing, depreciation, repair exposure and resale should cover the same years and miles.

Evidence for both vehicles

  • Out-the-door price and same-day financing terms.
  • Inspection, warranty, maintenance and immediate reconditioning needs.
  • Resale ranges at one shared age, mileage and exit date.
  • Choose matched vehicles and a common horizon.
  • Price out-the-door transactions and financing.
  • Add age-specific maintenance and repair ranges.
  • Estimate net resale at the same date.
  • Run high-repair and low-resale cases.

Compare both paths on the same clock

Car Ownership Cost Calculator

Model the costs that continue after the purchase price leaves the showroom.

Where the comparison stops being fair

  • Comparing a base used trim with a premium new trim.
  • Using MSRP instead of transaction price.
  • Assuming warranty means zero maintenance.
  • Giving the used car no resale value at the end.

Questions this decision usually raises

How old should a used car be?

There is no universal age; reliability, price, condition and planned ownership period matter.

Does a lower new-car rate make new cheaper?

It can narrow the gap, but compare interest dollars with transaction price and depreciation.

Should inspection cost count?

Yes, as a transaction cost and risk-control step for the used option.

Evidence behind the comparison

This page explains a calculation, not a personal recommendation. Contract rules and consumer protections vary by product and jurisdiction. Check the current agreement and official guidance before acting.