Used Cars Not Always Cheaper Than New, Edmunds Says


  • 2014 Mazda 2 Picture

    2014 Mazda 2 Picture

    For a Mazda 2 Sport, the typical monthly payment when new is $242, compared with $255 for a certified pre-owned version. | December 26, 2013

Just the Facts:
  • Used cars are not always cheaper than new cars, especially when the economic climate is as unusual as it is now, according to Edmunds.
  • The deals on some new cars are so generous, they actually make a new car less expensive than both a one-year-old used and certified pre-owned version of the same model.
  • Automakers and dealers expect to keep new cars selling, so expect a plentiful number of deals this holiday season.

SANTA MONICA, California — Used cars are not always cheaper than new cars, especially when the economic climate is as unusual as it is now, according to Edmunds.

"The deals on some new cars are so generous, they actually make a new car less expensive than both a one-year-old used and certified pre-owned version of the same model," Edmunds said in a new survey on car buying.

Senior Analyst Jessica Caldwell observes: "Automakers and dealers expect to keep new cars selling, so expect a plentiful number of deals this holiday season."

To illustrate this point, Edmunds compared the vehicles' True Market Value transaction prices and typical interest payments. Because used/certified pre-owned cars are generally financed at a higher rate than new cars, a shopper can actually save money in some cases by purchasing a new vehicle instead of a used version.

Among the examples cited are a Volkswagen Jetta GLI, whose typical monthly payment when new is $389, compared with $390 for a one-year-old version.

The typical monthly payment on a new Honda CR-V EX is $433, compared with $434 for a certified pre-owned version. For a Mazda 2 Sport, the typical monthly payment when new is $242, compared with $255 for a certified pre-owned version.

The list of new cars cheaper than their used counterparts has dwindled over the years due to softening used-car prices, Caldwell said, but there are still some good deals.

Edmunds assumed a 60-month loan term, no down payment with a typical finance rate for new cars and a typical finance rate for one-year-old used cars. Edmunds added in destination charges and gas-guzzler taxes as appropriate.

Many of the year-end deals continue to January 2.

Edmunds says: Don't make the assumption that a newly used vehicle is always a better deal than a new car.

Comments

  • pommah pommah Posts:

    If you are willing to think beyond just month to month payment, and think about total cost of ownership per mile, it's even more in favor of new cars right now, because when the car is new it has lower maintenance costs.

  • reminder reminder Posts:

    Generally speaking, the sweet spot for buying used is around the third year. Recently turned in leases can be a way to get into a lower mileage used vehicle, particularly if the dealership had an arrangement for scheduled maintenance included. Purchasing used at or around the third year, typically nets the buyer 40-45% off MSRP if not more. But of course it's all a crap shoot in the end. As always, buyer beware.

  • shatner shatner Posts:

    I have been saying it for years that car like Honda's and Toyota's are often a better deal new than used. Now something like a Lincoln Town car that depreciated 50% in 3 years is better value used.

  • bassrockerx bassrockerx Posts:

    This is comparing edmund's TMV for used cars wich is notoriously overly ambitious in it's pricing. also used cars are cheaper to insure and register. and this article does not take those additional costs into account Granted you don't get ripped off on the used car it will allways be a little cheaper than the brand new car. how much or how little extra cash is worth it to have that new car smell on the way home is for you to decide.

  • patrickw patrickw Posts:

    The other big factor here (other than higher interest rates for used vehicles) is CPO vehicles: when I buy a used car, I get a good mechanic to look it over and then buy a reliable 3rd-party warranty, thus saving a considerable percentage over CPO prices.

  • stever stever Posts:

    "After peaking last spring, used car prices have been falling for five consecutive months, according to the Manheim Used Vehicle Value Index. The index, considered one of the most reliable in the industry, showed wholesale used vehicle prices were down 0.3 percent in September, the latest month available. Credit the price declines to healthy new car sales, which have resulted in more trade-ins showing up on used car lots. In addition, auto experts cited a surge in the number of leased vehicles being turned in to dealerships to be resold." Lower used car prices signal a buying opportunity (kansascity.com)

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