Based on a study of 1.5 million transactions in January, the average price of a used Mercedes-Benz G-Class luxury SUV is $62,705 more than the MSRP, which is about 36% higher than the new one. The difference between a new and used Chevrolet Corvette is $16,645, or 20%. For the most popular models, the waitlists at new-car shops go into 2023.

Used car dealerships are becoming the go-to places for wealthy shoppers and those needing a vehicle. Two extremes vie for top dollar: tiny, fuel-efficient vehicles and hybrids and pricey, gas-guzzling SUVs. Autonomy data shows that a brand new Tesla Model Y would normally cost $63,242, while a used one would cost $67,944 at the end of last year. In 2021, the Model Y's value increased by $10,393, more than the average increase of comparable luxury SUVs, which was $7,088.

It should be mentioned that the "residual value," which refers to the growth in resale prices for electric cheap brand new cars, is an important part of a lease deal. Monthly payments are reduced when the residual value is larger, making leasing more appealing.

Deals on Automobiles

Brauer claims that the exorbitant price hikes do not apply to all used automobiles. According to the iSeeCars research, 15 popular models were still more costly to buy new than used. Included on the list were some models that haven't done well in sales history and outgoing versions of remodeled cars like the Volkswagen GTI and Acura MDX. However, all prices have increased.

Customers often find better deals on gently used cars when comparing new and lightly used vehicles. However, savings are 25%–30% lower than predicted. Buying a 1- or 2-year-old Ford Mustang saved purchasers $9,500, according to iSeeCars.

Buying A Car

In the event that you are in dire need of a vehicle immediately, here are a few options to think about:

• You may want to think about buying a car online. The cost might vary greatly from one place to another, so it's a good idea to research local new and secondhand costs. Keep away from models that have the most significant price hikes; you should know better.
• To get around the high prices of new and secondhand automobiles, you may get one straight from the manufacturer. It's better than attempting to purchase it immediately, but it doesn't mean you'll pay full price.
• As a stopgap measure, consider subscribing to a service like Autonomy that makes getting in and out of automobiles easier. You may get a car by satisfying someone else's lease.

Advantages and Drawbacks of Used Cars

Before buying a used automobile, weigh the pros and cons.

Advantages

• Kelley Blue Book reported a $27,147 average used automobile price in June 2023. The average new automobile costs $48,808. The difference is over $21,000.
• Advantages of buying a used automobile include a potentially cheaper monthly payment ($516 vs. $725 for a cheap brand new cars in the first quarter of 2023, according to Experian statistics). This saves about $2,500 on car payments annually.
• In the second quarter of 2023, Edmunds, an online automotive marketplace, reported that the average new vehicle down payment was $6,823 and the average used car was $4,107. This down payment was 66% more than the average for a new car.
• Franchised auto dealerships sell certified pre-owned automobiles after a comprehensive inspection and repairs. Late-model cars. This is an option if you want a cheaper car without the headache of buying secondhand.

Drawbacks

Potential drawbacks of purchasing a pre-owned vehicle encompass:

• Edmunds stated that the average APR for a used car loan with 68.5 months of payment was 11% in the second quarter of 2023. New cars cheap loans with 68.5 months were 7.1%. All else being equal, a used vehicle buyer may pay more in interest over the life of a loan than a new car buyer.
• Used cars might be more expensive to maintain and repair. A Toyota Corolla should cost $148 in the first year and $755 in the tenth.
• Use car warranties may be less extensive or shorter than new car warranties.
• A ten-year-old car may not have all the current features. A less sophisticated infotainment system than a cheap brand new cars is an example.

Advantages and Drawbacks of A New Car

Advantages

• Newer cars may have fewer issues, such as a history of bad maintenance, than old ones since newer cars have been used more. This means that newer cars are in better shape overall.
• New car loans may be several percentage points lower than used car loans. Even with a bigger initial loan amount, this may save a lot over time.
• Since cheap new cars have longer warranties, buying one might save you a lot of money on repairs.
• Cut down on maintenance and repair expenses. Costs associated with repairs and maintenance tend to be cheaper for newer vehicles. For example, according to statistics from CarEdge.com, the expected yearly expenditures for a Honda Civic start at $183 in the first year and go up to $977 in the tenth year.

Drawbacks

The downsides of buying a new car are:

• Extra cash is required. New car buyers experience sticker shock.
• Most cheap brand new cars lose 20% or more in the first year. When the car reaches 10 years, depreciation stops.
• The sales tax on your automobile increases with its price. It makes sense that new cars are taxed more than old ones.
• Insurance for cheap new cars might be more costly than for used ones. Repairs for a new car are normally more expensive, which might strain your budget.

Bottom Line

The purchase price, monthly payment, expected insurance premium, and year maintenance expenses are all factors in purchasing a new or used car. Do some planning before car buying to avoid falling in love with a vehicle out of your price range.