New car prices are near $50,000, but buying used isn’t always cheaper—here's why

With new car prices hovering around $50,000 these days, buying used can feel like a no-brainer because of how much new cars depreciate in their first few years.

New vehicles typically lose about 30% of their value within the first two years, according to Kelley Blue Book. Plus, the price gap between new and used cars has largely widened since 2023, making used vehicles more attractive for buyers looking to avoid early depreciation, per Edmunds.

But those upfront savings don't account for everything buyers end up paying. Monthly costs are also shaped by loan interest, repair and maintenance risk and how long a buyer plans to keep the car — factors that can erase the advantage many buyers expect from going used.

"Most buyers significantly overweight depreciation because it's the easiest number to understand," says Scott Kunes, chief operating officer of Kunes Auto and RV Group. "Depreciation absolutely matters, but it shouldn't be the dominant factor. What really impacts a buyer's financial health is the total cost of ownership."

New cars can be significantly more expensive upfront: Buyers paid an average of about $47,100 for a new vehicle in December 2025, compared with roughly $29,600 for a used vehicle, based on retail transaction prices tracked by J.D. Power.

However, financing costs for used cars tend to be higher. Average annual percentage rates on new-car loans were about 6.6%, compared with roughly 11.4% for used-car loans in the three months ending in September, according to Experian — a gap that can add thousands of dollars in interest over the life of a loan.

Similarly, maintenance costs can vary drastically between new and used vehicles.

New cars often come with warranties that limit repair costs in the first few years of ownership, while used vehicles typically face higher maintenance and repair expenses as they age. Cars that are five years old or older typically incur around $800 to $1,000 a year in maintenance and repair costs, on average, according to Consumer Reports.

"In many cases, a new car with a lower APR and a full warranty can actually cost less per month than a lightly used vehicle with a higher interest rate and no coverage," says Kunes.

When comparing financing options for new and used cars, be sure to consider the terms.

New-vehicle buyers are more likely to extend financing up to 84 months, Experian reports, which can lower monthly payments but substantially increase total interest paid. On a typical $50,000 new-car loan with a $10,000 down payment and 8% APR, stretching financing from 48 months to 84 months can add nearly $5,500 in extra interest over the life of the loan.

In other words, the same car can look affordable or expensive depending on how it's financed. Interest rates matter, but so does the length of the loan and the size of the down payment.

"Buying new tends to look better if you plan to keep the car a long time, since the initial depreciation gets spread over more years," says Kevin Roberts, director of economic and market intelligence for CarGurus. "Used tends to make more sense when there is a clear purchase price advantage, and you can keep a shorter loan term, or avoid financing altogether."

The decision is less about rules of thumb and more about matching the purchase to how long you plan to keep the car — and how much cost certainty you want, he says.

Since small changes in APR, loan term or down payment can significantly change both monthly costs and total interest paid, consider running the numbers using an auto loan calculator, before deciding which car to buy.

"The right approach is to buy the best car you can afford, whether that vehicle is new or used," says Joseph Yoon, a consumer insights analyst at Edmunds. "Gone are the days of either new or used vehicles being the absolute better deal."

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