Yes! Buying a New Car Makes More Sense than Buying Used

To calculate the full cost of ownership, let’s first decide which cars we’ll look at. 

Which Cars Should We Analyze?

Buying A New Car Is Really Expensive At First, But Over Time…

Buying new has several attractions.

Full Cost Of Ownership

Edmunds.com has a nifty tool for estimating the full cost of owning vehicles for 5 years, accounting for region. The true cost to own includes maintenance, repairs, taxes & fees, financing, depreciation and fuel.

Honda CRV

The cost to buy a new 2019 Honda CRV and keep it for 5 years is $33,742.

Kia Soul

The cost to buy a new 2019 Kia Soul and keep it for 5 years is $30,648.

Toyota Camry Hybrid

The cost to buy a new 2019 Toyota Camry hybrid and keep it for 5 years is $37,697.

Buying A Used Car Isn’t The Slam-Dunk Financial Case People Believe

Notice that this is more expensive than the average annual cost of buying new and keeping the car for 10 years for the CRV and Soul!

Leasing A New Car Makes Little Sense, Unless…

In almost all cases, leasing makes little financial sense, even if you drive relatively few miles (leases usually allow only 12,000 miles a year).

Caveats

– We neglected the time-value of money, and costs are higher in the early years, so taking a straight average isn’t completely accurate.

– Car makers change their models from year to year, sometimes a lot.

– We neglected inflation, which will make the cost in later years higher in nominal dollars.

In reality, buying new and driving your car for 10 years averages about the same cost (cheaper in some cases) than buying used, and is more fun.

The Bottom Line

Money Management

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