Is it smarter to buy new or used?

For pure economics, a 2-4 year old used car is typically the sweet spot - major depreciation absorbed, still modern and reliable. New makes sense if you plan to keep it 10+ years or want specific features.

Do I pay more interest on a used car loan?

Yes, typically 1-3% higher. Lenders see higher risk in older vehicles. However, the lower loan amount often means less total interest despite the higher rate.

New vs Used Car Calculator

Calculator

Compare the true cost of buying new versus used over time

Free to useNo data storedAI insightsUpdated: February 2026

New car smell or better value? This calculator compares the true cost of buying new versus used, factoring in depreciation, interest rates, and running costs.

Enter Your Details

Real-World Examples

Family SUV Comparison

New Mazda CX-5 at $45,000 vs 3-year-old same model at $28,000 with 45,000km.

Inputs Used:

newPrice:45,000usedPrice:28,000usedAge:3

Over 5 years: New costs $32,000 in depreciation. Used: $12,000. Even with higher rate, used saves ~$15,000 total.

Frequently Asked Questions

Glossary

Depreciation

The loss in value as a car ages. Typically 15-25% in year 1, then 10-15% per year.

Certified Pre-Owned (CPO)

Used cars inspected and certified by manufacturers, often with extended warranty.

Drive-Away Price

The total price including all on-road costs - what you actually pay to drive the car away.

Related Tools

Depreciation Calculator

Calculate vehicle depreciation over time

Total Cost of Ownership

Full cost including all expenses

Car Loan Calculator

Calculate loan repayments

How to Use

1Enter the new car price (drive-away)
2Add the used car alternative price
3Include the used car's age and kilometers
4Compare interest rates for each option
5Set how long you plan to keep the car

Key Information

New cars depreciate 15-25% in the first year alone
A 3-year-old car has already absorbed major depreciation
New cars often have lower interest rates and warranty coverage
Used cars may have higher maintenance and insurance costs

Pro Tips

Consider certified pre-owned for warranty protection on used
Check the specific model's depreciation curve - some hold value better
Factor in warranty - new cars have 3-7 years, used may have none
Look at 'nearly new' demos or ex-rental for best value

Avoid These Mistakes

Only comparing sticker prices without considering total cost
Ignoring depreciation - the biggest cost of car ownership
Not factoring in the higher interest rates on used car loans
Forgetting that older cars need more repairs

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026