New vs used: which car actually costs less?

“New or used?” is really a question about depreciation — the value a car loses over time. Get that one number right and the rest of the math follows.

The first-year cliff

A new car loses the most value in its first year — often 20% or more — then the curve flattens. Buying a one- to two-year-old car lets the first owner eat that steepest drop while you still get most of the useful life. See the shape with the depreciation calculator.

When used wins

Used almost always wins on pure cost: lower price, lower depreciation, often lower insurance and registration. If you’re optimizing for dollars, a lightly-used car in the 2–4 year range is the sweet spot — past the cliff, before the expensive-repair years.

When new is worth it

• You keep cars 10+ years, so the depreciation premium spreads thin.
• You want the warranty, latest safety tech, or a specific model with no good used supply.
• Used prices are abnormally high (as in recent years), shrinking the gap.

Run both numbers

Put a specific new car and used car side by side with the compare two cars calculator, and fold in fuel, insurance, and maintenance with the cost of ownership calculator.