New vs Used Car Loan Calculator
Compare new vs used car financing costs, payments, and total ownership expenses. Make an informed decision with detailed analysis of rates, depreciation, and benefits.
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Use our calculator to compare new vs used car loan payments and total costs based on your specific situation and credit profile.
New vs Used Car Loan Calculator
Compare financing options for different vehicle types
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New vs Used vs Certified Pre-Owned Comparison
New Car Loans
Brand New Vehicle
Benefits
- Lowest interest rates
- Manufacturer incentives (0% APR)
- Full warranty coverage
- Latest technology and safety features
- Predictable maintenance costs
Drawbacks
- Immediate depreciation (20-30%)
- Higher monthly payments
- Higher insurance costs
- Full sales tax on purchase price
Best For:
Buyers who want reliability, latest features, and can afford higher payments
Used Car Loans
Pre-Owned Vehicle
Benefits
- Lower purchase price
- Reduced depreciation impact
- Lower insurance costs
- More car for your money
Drawbacks
- Higher interest rates
- Limited or no warranty
- Unknown maintenance history
- Potential for more repairs
Best For:
Budget-conscious buyers who want lower payments and less depreciation
Certified Pre-Owned
Manufacturer Certified
Benefits
- Lower rates than regular used cars
- Extended warranty
- Rigorous inspection process
- Good compromise between new and used
Drawbacks
- Higher cost than regular used cars
- Limited selection
- Still faces some depreciation
Best For:
Buyers wanting reliability of new with cost savings of used
Auto Loan Rates by Credit Score
| Credit Score Range | New Car Rate | Used Car Rate | Certified Pre-Owned |
|---|---|---|---|
| 781-850 (Excellent) | 3.5% | 4.5% | 3.8% |
| 661-780 (Good) | 4.2% | 6.2% | 5.1% |
| 601-660 (Fair) | 6.5% | 9.8% | 7.9% |
| 501-600 (Poor) | 9.2% | 13.5% | 11.2% |
| 300-500 (Bad) | 12.8% | 18.5% | 15.8% |
Real-World Financing Scenarios
Budget Sedan: $25,000 New vs $18,000 Used (3 years old)
New Car Option
Used Car Option
Analysis
Used car saves $7,000 upfront and $125/month, but may have higher maintenance costs
Luxury SUV: $55,000 New vs $38,000 Used (2 years old)
New Car Option
Used Car Option
Analysis
Used luxury vehicle saves $17,000 total but loses some warranty coverage and latest features
Key Decision Factors
Total Cost of Ownership
New Car Advantage:
Predictable maintenance costs and full warranty coverage
Used Car Advantage:
Lower purchase price and reduced depreciation impact
Key Considerations:
- Factor in insurance, maintenance, repairs, and depreciation
- New cars have higher upfront costs but lower surprise expenses
- Used cars save money initially but may have higher long-term costs
Financing Terms
New Car Advantage:
Lower interest rates and manufacturer incentives (sometimes 0% APR)
Used Car Advantage:
Shorter loan terms mean less total interest paid
Key Considerations:
- New car rates typically 1-3% lower than used
- Manufacturer incentives can offset higher price
- Used car loans often have shorter maximum terms
Depreciation Impact
New Car Advantage:
You know the complete history and get all the use
Used Car Advantage:
Avoid the steepest depreciation period (first 1-3 years)
Key Considerations:
- New cars lose 20-30% value in first year
- Most depreciation occurs in first 5 years
- Used cars have already absorbed major depreciation
Reliability and Warranty
New Car Advantage:
Full manufacturer warranty and known maintenance history
Used Car Advantage:
Proven reliability record and any issues likely discovered
Key Considerations:
- New cars come with full warranty coverage
- Used cars may have remaining warranty
- Consider certified pre-owned for balance of both
Auto Loan Tips by Vehicle Type
New Car Loan Tips
- Shop for pre-approval before visiting dealers
- Compare dealer financing with bank/credit union rates
- Look for manufacturer incentives and rebates
- Consider shorter loan terms to save on interest
- Negotiate the total price, not just monthly payment
- Factor in gap insurance for new car depreciation
Used Car Loan Tips
- Get pre-purchase inspection from qualified mechanic
- Research vehicle history report (Carfax/AutoCheck)
- Consider certified pre-owned for better rates
- Factor in immediate repair costs in budget
- Shop credit unions for better used car rates
- Verify remaining warranty coverage
New vs Used Car Loan FAQ
Should I buy a new or used car?
Choose new if you want the latest features, full warranty coverage, and can afford higher payments. Choose used if you want lower monthly payments, reduced depreciation impact, and better overall value. Consider your budget, reliability needs, and how long you plan to keep the vehicle.
What are the interest rates for new vs used car loans?
New car loans typically have rates 1-3% lower than used car loans. New car rates range from 3.5-7.5% for qualified buyers, while used car rates range from 4.5-15% depending on credit score, vehicle age, and loan term. Certified pre-owned rates fall in between.
How much do new cars depreciate?
New cars typically lose 20-30% of their value in the first year and about 60% in the first 5 years. This immediate depreciation is the biggest financial cost of new car ownership. Used cars have already absorbed most of this depreciation, making them better from a pure financial perspective.
Is certified pre-owned worth the extra cost?
Certified pre-owned vehicles offer a good compromise with interest rates lower than regular used cars, extended warranty coverage, and thorough multi-point inspections. They cost more than non-certified used cars but provide more peace of mind and often qualify for manufacturer financing incentives.
What factors affect auto loan rates?
Key factors include your credit score (most important), vehicle age, loan term, down payment amount, debt-to-income ratio, and whether you choose new, used, or certified pre-owned. New cars get the best rates, while older used cars have higher rates due to increased risk.
Should I get financing from the dealer or my bank?
Shop both options. Get pre-approved from banks or credit unions first to know your baseline rate, then compare with dealer financing. Dealers sometimes offer manufacturer incentives or promotional rates that can beat bank rates, especially on new cars. Choose whichever offers the best total deal.
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Use our calculators to compare options, then shop for pre-approval to get the best rates and terms.