New or used: what makes sense right now

The cost nobody puts on the sticker

A new car typically loses around a fifth of its value in the first year and close to half by year four, then the drop slows down. That loss is real money you pay for the privilege of being first, and it's usually the biggest cost of owning a newer car, more than fuel or repairs.

When new makes sense

• You'll keep it ten years or more, so the first-year loss is spread thin
• The maker is offering a low promotional rate or a rebate that beats used-car loan rates
• Used prices for that model are close to new (popular trucks and hybrids often are)
• You want a specific safety feature or drivetrain that older model years didn't have
• You don't want to think about repairs for the first few years

0 of 5 ready

When used makes sense

• You'd trade or sell within five years
• You're paying cash or your used-car rate is close to the new-car rate
• The model has a good reliability record, so year-five repairs are small
• You're happy with last year's shape and last year's screen
• You'd rather spend the difference on something else

0 of 5 ready

Do the five-year math

For each car you're considering, write down the price, a guess at what it'll be worth when you sell (look at what five-year-old ones of the same model cost today), the interest you'd pay over the loan, an insurance quote, your state's sales tax, and a repair budget: near zero for a new car under warranty, a few hundred a year for a good used one. Add them up. The smaller total is your answer.

The middle option: certified pre-owned

Dealers sell inspected, late-model used cars with an extended factory warranty as "certified". You pay more than for the same car from a private seller, and less than new. Worth it if the warranty is what you were buying new for; not worth it if you'd budget for repairs anyway.