Buying new gets you a car no one has driven, the full factory warranty, and the manufacturer's incentives, such as subsidized rates and lease programs, at a higher price; buying used gets you a lower price because the first owner absorbed the steepest years of depreciation, with less warranty left, usually a higher loan rate, and more to check before you sign.
Neither costs less for every buyer. The gap narrows when the new car carries a subsidized rate and the used one a used-car rate, so compare what each costs over the years you will keep it, not the sticker. Certified pre-owned cars and former loaners sit in between.
| New | Used | |
|---|---|---|
| Price | The dealership's selling price, against the MSRP on the window sticker | Lower for the same model, set by age, miles, condition, and the market |
| Depreciation | Steepest in the first years | The first owner absorbed the early years; the value usually keeps falling, more slowly |
| Factory warranty | The full warranty, starting the day you take delivery | Whatever is left of it, a certified pre-owned warranty, or none; the FTC Buyers Guide on the window says which |
| Loan rates | New-car rates, and the manufacturer's subsidized rates when a program is in effect | Used-car rates, which usually run higher for the same credit |
| Manufacturer incentives | Rebates, subsidized rates, and lease programs | Rare; some brands support certified pre-owned rates |
| Leasing | Widely offered through the brand's captive lender | Limited; some lenders lease late-model used cars |
| History and condition | Nothing to check beyond the delivery inspection | Ask for the vehicle history report and service records, and have it inspected |
| Sales tax | On the higher price, less any trade-in credit your state allows | On the lower price, the same way |
| Choice | The exact trim, color, and options, in stock or ordered | What is on the market, with the options the first owner chose |
A certified pre-owned car is a late-model used car that passed the manufacturer's inspection and carries its extended warranty, and some brands support it with lower rates. A former loaner is a late-model car a dealership lent to its service customers; it usually has a few thousand miles and is sold as a used car under the FTC's Used Car Rule, with part of the factory warranty already used. Both cost less than new and more than an ordinary used car of the same age.
It depends on how long you keep cars, how you pay, and what the manufacturer is offering. New usually fits when you keep a car for many years, want a lease, or a subsidized rate is in effect; used usually fits when the lowest purchase price matters most and you will have the car inspected. Compare the out-the-door price, and the payment at the rate each one carries, over the years you will keep it.
Usually. For the same credit, lenders often quote higher rates on used cars, and the manufacturer's subsidized rates apply to new cars and, at some brands, to certified pre-owned ones.
In its first years. That early drop is the main reason a used car of the same model costs less, and the reason a new car kept for many years spreads it out.
Used. Under the FTC's Used Car Rule, a vehicle driven more than the limited use needed to move or road-test it before delivery is a used vehicle, and a loaner has been driven by service customers. It is usually a late-model car with a few thousand miles.
Sometimes. Lease programs are built for new cars, and some lenders lease late-model used cars or former loaners. Ask the dealership which lenders it works with.