New vs Used Car Calculator
Both cars costed the same way — everything paid over the years you would keep it, less what it is still worth at the end.
The used car costs less
$13,263
Over 5 years, net of what each car is still worth: $45,393 for the new one against $32,130 for the used. That is $221 a month of difference, against a payment gap of $293.
- $45,393
- $757/mo all in
- $32,130
- $536/mo all in
- $724
- $431
- $25,456
- $12,279
Line by line
Everything paid over the holding period, and everything you still have at the end of it.
| Over 5 years | New | Used |
|---|---|---|
| Purchase price | $42,000 | $26,000 |
| Monthly payment | $724 | $431 |
| Cash paid in | $48,437 | $30,851 |
| Of which interest | $6,437 | $4,851 |
| Maintenance | $3,000 | $7,000 |
| Insurance | $10,500 | $8,000 |
| Worth at the end | $16,544 | $13,721 |
| Still owed then | $0 | $0 |
| Depreciation | $25,456 | $12,279 |
| Net cost | $45,393 | $32,130 |
Net cost is everything paid — down payment, instalments, servicing and insurance — less what the car is still worth to you after settling any remaining balance. Comparing monthly payments instead of this is how a longer loan on a more expensive car comes to look affordable.
Depreciation is the real price difference
Not the sticker. The used car is cheaper mainly because someone else already absorbed the steepest part of its decline.
What the new car loses
$25,456
61% of its price over 5 years, at 17% a year.
What the used car loses
$12,279
47% of its price, at 12% a year — the curve is flatter once the first drop has happened.
Both depreciation rates are yours to set, and they should not be the same number. A car loses value fastest when it is newest, so a three-year-old car declines more slowly than a new one even in percentage terms. Rates vary enormously between models — a valuation guide for the specific car will beat any figure a calculator could assume, which is why nothing is assumed here.
The honest case for the new car is in the other rows: a warranty covering the repairs the used car will need, and a lower finance rate, which lenders do routinely offer on new vehicles. Raise the used car’s maintenance high enough and it stops being cheaper — try it above.
How this calculator works
One cost model, applied identically to both cars, so the comparison cannot favour either by construction.
Each car’s loan is amortized month by month for as long as you hold it. Cash paid is the down payment plus every instalment actually made — so selling before the loan ends counts only the payments you made, and leaves the remaining balance to be settled from the sale.
Resale value declines on a compounding curve at the rate you set. Net cost is then cash paid, plus maintenance and insurance over the period, less the resale value net of any balance still owed — everything out, less what you keep.
Both depreciation rates are yours to set, and they should not be equal. A car loses value fastest when new, so a used car normally warrants a lower rate — that difference is the financial case for buying used, and it belongs in the input rather than baked into the calculator.
What is assumed
- A constant depreciation rate for each car, applied smoothly.
- Maintenance and insurance as flat annual figures.
- The car is sold at the end of the period at its computed value.
- No sales tax, registration or fuel.
A worked example
A $42,000 new car at 6.5% against a $26,000 used one at 8.5%, both with $5,000 down over 60 months, kept five years.
| New — cash paid in | $5,000 + ($723.95 × 60) |
|---|---|
| New — worth after 5 years | $42,000 × 0.83⁵ |
| New — net cost | 48,437 + 3,000 + 10,500 − 16,543.97 |
| Used — cash paid in | $5,000 + ($430.85 × 60) |
| Used — worth after 5 years | $26,000 × 0.88⁵ |
| Used — net cost | 30,851 + 7,000 + 8,000 − 13,721.03 |
| The used car costs less by | 45,393.03 − 32,129.97 |
$221 a month of real difference, against a payment gap of $293. The payment overstates it, because the new car is worth more at the end — but not by nearly enough to close the gap, and that is the point. Depreciation does most of the work: $25,456 on the new car against $12,279 on the used one.
Notice how the other lines push back, and by how little. Over the five years the used car spends $4,000 more on maintenance — but $1,586 less on interest, despite the two-point higher rate, because it is borrowing so much less, and $2,500 less on insurance. Those three cancel almost exactly: the used car is $86 cheaper to run over the whole five years, so the entire $13,263 gap is depreciation. Push that maintenance figure to $7,000 a year rather than $1,400, though, and the new car wins outright: a real scenario for a car with a known expensive failure ahead of it, and exactly what the input is there to test.
Questions people ask
No, and the calculator will show you when it is not. A used car usually wins on depreciation, which is the largest single cost of owning a car, but it can lose on finance rate — lenders routinely price used loans higher — and on maintenance, since it is out of warranty and further through its service life. Raise the used car's repair budget high enough above and the new car becomes the cheaper option.
Because the monthly payment can be made to say almost anything by changing the loan term, and it ignores both what the car is still worth at the end and everything you pay outside the loan. A longer loan on a more expensive car can have the lower payment and the higher cost. Net cost is everything paid, less what you walk away with.
It varies enormously by make, model, trim, mileage and condition, and any single published figure goes stale. That is why both depreciation rates are inputs here rather than assumptions. What is reliable is the shape: a car loses value fastest when it is newest, so a three-year-old car declines more slowly than a new one even in percentage terms — which is the whole financial case for buying used.
A warranty that covers the repairs the used car will need, a lower finance rate, a known history, and the newest safety equipment. None of these is imaginary and the first two are in the calculation above. The case that does not survive contact with arithmetic is the monthly payment — that one usually reflects a longer loan rather than a cheaper car.
Yes, and it is the input people underestimate. Depreciation is front-loaded, so the longer you hold a new car the more of its steep early decline gets spread across your ownership. Holding either car for ten years narrows the gap considerably; trading every three years widens it, because you repeat the expensive part of the curve each time.
Sales tax and registration, which scale with price and therefore favour the used car; fuel, which depends on the specific vehicles rather than their age; and the risk profile of a used car, where the maintenance figure is an average over an outcome that is actually lumpy. It also assumes you sell at the end rather than driving the car to the end of its life.
Related calculators
Depreciation, maintenance and insurance are the figures you supply, and the answer moves with them. It excludes sales tax, registration and fuel, and it assumes you sell at the end of the period rather than keeping the car.