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New car vs used car
Five-year-style total cost of ownership for a new car against a used alternative, with depreciation, loan payments, insurance, and maintenance priced in.
COMPARISON · MONEY · CARS
New Car vs Used Car
A $48,000 new car versus the same class of car 3 years old at $26,000, owned for 5 years. The new car costs $855.41 a month to finance against $491.44 for the used one. After five years the new car is worth $22,490.27 and the used one $15,009.71. Total cost of ownership: $48,134.44 new vs $30,576.90 used — the used car wins by $17,557.54. Run your own prices, rates, and horizon below.
The 60-second rule
Total cost of ownership = down payment + all loan payments + (insurance + maintenance) × years − resale value. At the defaults: $48,134.44 for the new car against $30,576.90 for the used one — the used car wins by $17,557.54. The sticker gap is $22,000; the honest gap after five years of interest, depreciation, insurance, and maintenance is still $17,557.54 in the used car's favor.
The worked example, line by line
Setup: $48,000 new, $26,000 used (3 years old), 10% down each, 5-year loans at 7.0% new / 9.5% used, insurance $2,300/$1,600 a year, maintenance $600/$1,100 a year, 5-year horizon.
The loans. New: $43,200 financed at 7.0% for 5 years → $855.41 a month, $51,324.71 total. Used: $23,400 financed at 9.5% for 5 years → $491.44 a month, $29,486.61 total. The used loan costs $21,838.10 less even at the higher rate, because the principal is so much smaller.
Resale after 5 years. New: $48,000 × 0.80 × 0.85 × 0.87 × 0.88 × 0.90 = $22,490.27. Used: $26,000 × 0.88 × 0.89 × 0.90 × 0.90 × 0.91 = $15,009.71. The new car holds more dollars — $7,480.56 more — but loses $25,509.73 of value along the way, against the used car's $10,990.29 of value lost.
Carrying costs. New: 5 × ($2,300 + $600) = $14,500. Used: 5 × ($1,600 + $1,100) = $13,500. Newer cars cost more to insure; older cars cost more to fix. Nearly a wash here.
The verdict: new TCO = $4,800 + $51,324.71 + $14,500 − $22,490.27 = $48,134.44; used TCO = $2,600 + $29,486.61 + $13,500 − $15,009.71 = $30,576.90. The used car wins by $17,557.54.
Branch — cheap used at $18,000: used TCO falls to $25,322.47; the gap grows to $22,811.97. A genuinely cheap used car is nearly a two-new-car-prices advantage.
Branch — pricey used at $33,000: used TCO rises to $35,174.53; the gap narrows to $12,959.92 — but the used car still wins by nearly thirteen thousand. Even an expensive used car beats a new one on dollars alone.
Branch — 10-year horizon: new TCO $71,844.43 vs used $49,193.99; the gap widens to $22,650.44. Once both loans are paid off, the new car keeps depreciating harder and insuring dearer — time rewards the used buyer.
Branch — 4.9% new-car promo APR: new TCO falls to $45,605.31; the gap narrows to $15,028.41. A subsidized rate helps, but it shaves thousands, not the $22,000 sticker gap.
The break-even point. The two cost lines cross exactly once, at month 28 (month 30 with the 4.9% promo). Before that, the new car's retained resale value flatters it on paper; after that the used car pulls ahead for good and never comes back. At every whole-year checkpoint from year 3 on, the used car wins.
Output · formula · meaning
| Output | Formula | What it means |
|---|---|---|
| New-car TCO | down + loan total + 5 × (insurance + maintenance) − resale(5 yr) | $48,134.44 at the defaults — the whole five years of the new car in one number. |
| Used-car TCO | same formula on the used price | $30,576.90 at the defaults. |
| Monthly payments | standard amortization, P·r(1+r)n / ((1+r)n − 1) | $855.41/mo new vs $491.44/mo used — the cash-flow difference you feel every month. |
| Resale at 5 years | price × ∏(1 − yearly depreciation) | $22,490.27 new vs $15,009.71 used — what each car is worth when you sell. |
| TCO gap | new TCO − used TCO | +$17,557.54 → used wins. Negative means the new car wins. |
Who uses this
- The “same car, 3 years old” shopper: weighing a new $48,000 car against its $26,000 used twin — this prices the depreciation cliff instead of guessing at it.
- The payment-focused buyer: $855.41 vs $491.44 a month is the number that decides whether the car fits the budget — the calculator shows both alongside the five-year truth.
- The long-hauler: set the horizon to 10 years to see why keeping cars longer rewards the used buyer by $22,650.44.
- The promo-rate hunter: test 4.9% new-car APR against the used alternative — the subsidized rate narrows the gap to $15,028.41 without closing it.
Accuracy & limitations
Depreciation here is a modeled estimate (20/15/13/12/10% of remaining value for new, 12/11/10/10/9% for used), not a quote on your car — real curves vary by make, mileage, and market. Insurance ($2,300/$1,600) and maintenance ($600/$1,100) are labeled 2026 estimates; set your real quotes. What this skips: sales tax, title, and dealer fees (add them to both sides if they differ), fuel (assumed same car class), and financing fees or rebates. The verdict is honest for the inputs given — garbage in, garbage out, so price your own numbers and re-run.
Cite this calculatorBright Side Kit. “New Car vs Used Car.” brightoolbox.com, 2026.
Bright Side Kit. "New Car vs Used Car." https://brightoolbox.com/new-car-vs-used-car/ Accessed October 23, 2026.Frequently asked questions
Is it cheaper to buy a new or used car in 2026?
By total cost of ownership, used. A $48,000 new car costs $48,134.44 over five years; the same class at 3 years old for $26,000 costs $30,576.90 — the used car wins by $17,557.54.
Why is the used-car loan cheaper at a higher APR?
Principal beats rate. The new loan is $43,200 at 7.0% ($855.41/mo, $51,324.71 total); the used loan is $23,400 at 9.5% ($491.44/mo, $29,486.61 total). The smaller principal wins by $21,838.10 despite the higher rate.
Does the used car always win?
Not always — it wins at these defaults. Plug in your real prices and rates: a heavily discounted new car, a 0% promo, or a pricey used car can narrow the gap. At $33,000 the used car still wins by $12,959.92, so it takes an extreme deal to flip it.
When does the new car catch up?
It doesn't — the lines cross exactly once, at month 28, and after that the used car pulls ahead for good. Before month 28 the new car's retained resale value flatters it; anyone holding past year 3 wins with used.
What if I keep the car 10 years?
The used car wins bigger: new TCO $71,844.43 vs used $49,193.99, a $22,650.44 gap. Once both loans are paid off, the new car keeps depreciating harder and insuring dearer.
Does a 4.9% promo APR change the answer?
It narrows the gap to $15,028.41 (new TCO $45,605.31) but doesn't flip it. Subsidized financing shaves thousands, not the $22,000 sticker gap.
What does this comparison leave out?
Sales tax, title, and dealer fees, fuel (assumed same car class), financing fees, and rebates. It also doesn't price warranty peace of mind or the joy of new — both real, both unpriced. See our new vs used true-cost calculator for the repair-differential angle.