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Used Car vs. New Car: When Does Buying Used Save You Money?

Buying used saves money only when the lower price and depreciation outweigh added financing, repairs, and other ownership costs. Compare specific cars over the same period and mileage.

By CarCody Team 5 min read

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Buying used saves you money when its lower price and lower depreciation outweigh any extra financing, repair, maintenance, insurance, and operating costs over the time you plan to own it. There is no universal age or mileage at which a used car becomes the better deal. Compare specific vehicles over the same ownership period and mileage, and include what each may be worth when you sell—not just the monthly payment.

Compare total cost over the same ownership period

Choose a realistic period—such as the years you expect to keep the vehicle—and estimate each candidate’s costs over that same span. Use the same expected mileage and transportation needs. A new car’s lower repair risk or better financing can matter, but neither automatically makes it cheaper than a used alternative.

Include these costs for each vehicle:

  • Purchase and fees: Compare out-the-door prices, including taxes and registration, rather than comparing a used listing price with a new car’s MSRP.
  • Financing: Use the actual offers, down payment, and loan terms available to you. Compare total interest, not only the monthly payment.
  • Depreciation: Subtract the vehicle’s estimated resale or trade-in value at the end of your ownership period from its purchase price.
  • Insurance: Get quotes for each exact vehicle using your own driver and location details.
  • Fuel or electricity: Estimate energy costs using your expected mileage, driving mix, and local prices.
  • Maintenance and repairs: Include routine service, tires, and plausible repairs, accounting for the used car’s condition and service history.

AAA’s vehicle cost calculator estimates depreciation, financing, fuel, insurance, fees, and maintenance; its maintenance category includes routine maintenance, unexpected repairs, and tire replacements. You can enter details such as location, annual mileage, city/highway mix, credit-score range, vehicle year, make, model, trim, and fuel price. The calculator’s results are generalized estimates for comparison, not guaranteed costs, and its current page allows used vehicles up to five years old. That is a tool limit, not a recommendation about the ideal age to buy.

Why a used car can be cheaper—or not

Used is more likely to save when the price gap survives the full comparison

A meaningful difference in out-the-door price can give a used car room to absorb higher interest or repair costs. That advantage is strongest when the vehicle has a credible maintenance and title history, its condition is verified, and expected repairs do not consume the savings. Estimate resale value for the point when you expect to sell; a generic age-based depreciation rule may not fit a particular vehicle or market.

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New can be less expensive when its higher price is offset elsewhere

A new car can compare favorably if its actual transaction price is close to the used alternative, its financing offer is materially better, or its warranty and condition reduce likely repair expense. The used candidate may also be unusually expensive for its age, have high mileage, or carry substantial repair risk. Verify each possibility with an actual price and financing offer, vehicle-specific history, insurance quotes, and—where appropriate—a qualified inspection. AAA recommends budgeting for ownership and operating costs while keeping vehicle price, financing rate, and trade-in value as separate negotiations.

What AAA’s new-car averages can—and cannot—tell you

AAA’s 2026 Your Driving Costs analysis estimates average new-vehicle ownership and operating costs at $12,863 per year ($1,071.92 per month). The estimate covers five years and 75,000 miles across seven vehicle categories and 34 top-selling models. AAA reports weighted-average annual depreciation of $4,422 and a sales-weighted average new-vehicle MSRP of $39,376. These are study averages, not predictions for a particular vehicle or proof of how much buying used saves. AAA says its 2026 methodology changed, so the estimate is not directly comparable with its 2025 result.

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For historical context, AAA’s 2025 estimate put average annual new-car cost at $11,577, using five top-selling models in each of nine vehicle categories and a standardized five-year, 75,000-mile period. Its assumptions included a five-year loan with 15% down. The insurance estimate assumed a driver under 65 with more than six years of experience, no accidents, and a city or suburban residence. Those assumptions do not describe every buyer, and the 2025 and 2026 figures should not be read as a like-for-like year-over-year increase.

The studies do help show why a sticker-price comparison is incomplete: costs vary by vehicle category and powertrain, as well as by location, driving habits, operating conditions, and other factors. As AAA’s director of automotive engineering Greg Brannon said in the September 15, 2026 release: “By looking at EVs, hybrids and traditional gas-powered vehicles within the same categories, consumers can better understand how total ownership costs vary by powertrain.”

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A practical way to compare two candidates

  1. Select genuinely comparable vehicles. Choose candidates that meet the same space, safety, reliability, and transportation needs. Record each actual out-the-door price, not just MSRP or listing price.
  2. Get financing terms first. Use the offers and down payment available to you, then calculate total interest over the planned loan term.
  3. Request insurance quotes. Ask for quotes on both exact vehicles using your circumstances.
  4. Standardize the operating assumptions. Enter the same location, annual mileage, fuel assumptions, and ownership period in a calculator such as AAA’s. Treat its outputs as estimates, not promises.
  5. Estimate the end value and upkeep. Project resale or trade-in value when you expect to sell, then account for service, tires, and likely repairs.
  6. Check the used car’s condition. Review maintenance and title history and arrange a qualified pre-purchase inspection. An OBD-II scan can reveal some stored diagnostic trouble codes, but it cannot certify the vehicle’s condition; AAA provides information about check-engine lights and trouble codes.
  7. Choose based on total cost and your priorities. Compare the estimates among vehicles that meet your needs. If the cost difference is small, warranty coverage, known history, or newer safety features may be worth paying more for, depending on what matters to you.
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How to interpret a close result

A cost estimate is only as useful as its inputs, especially for a used vehicle whose condition and future repair needs can be uncertain. Use vehicle-specific quotes and inspection findings where possible, and test how the comparison changes if repairs, resale value, or financing differ from your estimate. Actual costs also vary with state, insurance profile, fuel prices, driving habits, and the resale market. AAA’s calculator is intended to support a personalized comparison, not to replace those checks.

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