New vs used car: which should you buy?

Short answer: For most buyers, a 2–4 year old used car is the better value: new cars lose the most value early (about 12.5% in year one per Carfax, 16% per Kelley Blue Book). New can win when you get low promotional APR, since used-car loan rates average much higher.

The numbers

• Depreciation: Carfax says a new car loses about 12.5% in year one, then roughly 5% a year (Carfax). KBB's average curve is steeper: 16% in year one, about 55% by year five (KBB).
• Price: Edmunds' average transaction price was $48,899 new vs $26,880 used in June 2026 (Edmunds).
• Financing: Edmunds' average APR in August 2026 was 7% new vs 10.6% used (Edmunds).

How to decide

1. Compare total cost, not monthly payment: price + interest + expected value lost.
2. Get a loan pre-approval before visiting a dealer, then compare it to any promo APR on new.
3. If buying used, get the vehicle history and an independent inspection (FTC).
4. Check the out-the-door quote for add-ons and doc fees before you sign.

FAQ

How much value does a new car lose in the first year?

About 12.5% according to 2026 Carfax data, or about 16% on Kelley Blue Book's average curve. It varies a lot by model.

Are used car loan rates higher than new?

Yes. Edmunds reported an average APR of 10.6% for used vs 7% for new in August 2026.

Is a certified pre-owned car worth it?

CPO adds an inspection and extended warranty, usually for a higher price. Compare the CPO premium against the cost of an independent inspection plus a warranty you choose.

Sources

• Carfax, Car Depreciation (2026 data)
• Kelley Blue Book, Car Depreciation
• Edmunds, New & Used Average Transaction Prices
• Edmunds, Car Loan Rates (APR)
• FTC, Buying a Used Car From a Dealer

Figures as published by each source; checked October 2026. All buyer guides