Is it better to buy a new car or a used one?

Depreciation is the largest cost of owning a car and it is invisible because you never write a check for it. A new vehicle typically loses around 20 percent of its value in the first year and roughly 40 to 50 percent by year five. Buying a two to three year old car means the first owner paid for that decline, while a well-maintained modern vehicle still has the large majority of its usable life ahead, since 200,000 miles is now an ordinary expectation rather than a remarkable one. That gap is why used is the better financial decision in most cases, and the advantage is largest on models that depreciate hardest, which tends to mean luxury brands and vehicles that were heavily fleet-sold.

The honest counterarguments are real but narrower than dealers suggest. New cars carry full factory warranties, the latest crash-avoidance technology, and financing rates that are sometimes subsidized below market, which can occasionally close the gap. Certified pre-owned splits the difference with an inspection and extended warranty at a premium over ordinary used. The used market also moved: the supply shock of the early 2020s compressed the discount on late-model used cars enough that in some segments new made sense, so the calculation deserves checking against current prices rather than assumed. Whatever you buy, a pre-purchase inspection by an independent mechanic on any used vehicle is the highest-return hundred dollars in the transaction.