Friday, August 14, 2026

Money Matters - Buying New Vs. Old Cars

For some car shoppers, buying new could actually cost less than buying used, turning one of the oldest rules of car buying on its head. The reason is not the sticker price, but the cost of borrowing. Experian's latest available data puts the average used-car loan rate at 11.43%, compared with 6.39% for new vehicles, while some automakers offer even lower promotional rates on select new models. That financing gap can be large enough that, in certain comparisons, a higher-priced new vehicle can deliver a similar monthly payment or even cost less to finance overall than a cheaper used alternative.

The takeaway is not that new cars are suddenly cheaper across the board. It is that "buy used to save money" is no longer an automatic financial win. With new vehicles averaging $49,758 in June and used listings averaging $27,027, shoppers still face a substantial price difference. But financing can dramatically change the final math. Before choosing new or used, consumers need to compare the actual interest rate, incentives, monthly payment and total amount they will repay, not simply the price displayed on the windshield.

What Car Buyers Should Do Differently

Today's new-versus-used decision requires a different calculation and what consumers should do before signing a loan. Among the issues automotive retail analysts Ray and Zach Shefska can address:

  • Compare actual financing offers, not hypothetical monthly payments. Buyers should obtain the out-the-door price and actual APR for each vehicle and calculate the total amount they will repay over the loan.
  • Investigate new-car incentives before committing to used. A shopper considering a late-model used vehicle should check whether a comparable new model currently qualifies for manufacturer cash incentives or subsidized financing.
  • Get financing before entering the dealership. Bank and credit-union preapprovals can give buyers a benchmark against which to compare dealership financing, particularly when purchasing used.
  • Never shop solely by monthly payment. Extending the loan term can make an expensive vehicle appear affordable while increasing the amount of interest paid and potentially leaving the borrower owing more than the vehicle is worth.
  • Include ownership costs in the comparison. Depreciation can favor used vehicles, while remaining warranty coverage, mileage, maintenance requirements and expected repairs can alter the economics in either direction.
  • The message for consumers is not "buy new instead of used." It is much simpler: don't assume the cheaper car is automatically the cheaper deal.
  • With financing rates differing by more than five percentage points on average, today's smartest shopper needs to negotiate two prices: the price of the car and the price of the money used to buy it.

The Financing Gap

Experian reports the following Q1 2026 averages:

Financial Metric

New Vehicle

Used Vehicle

Average APR

6.39%

11.43%

Average Amount Financed

$43,925

$27,070

Average Monthly Payment

$770

$531

Average Loan Term

69.48 months

67.73 months

The figures illustrate an important distinction. Used-car buyers borrow considerably less money on average, but they pay substantially more for each dollar borrowed.

When the Math Can Flip

Consider a hypothetical shopper comparing a $32,000 certified pre-owned SUV financed at the 11.43% average used-car APR with a $40,000 new SUV eligible for a hypothetical 1.9% manufacturer promotional rate, both financed for 60 months:

Used SUV: A $32,000 loan at 11.43% would produce a payment of approximately $702 per month, approximately $10,115 in interest, and about $42,115 in total loan payments.

New SUV: A $40,000 loan at a promotional 1.9% APR would produce a payment of approximately $699 per month, approximately $1,963 in interest, and about $41,963 in total loan payments.

In this specific example, the vehicle costing $8,000 more upfront actually produces a slightly lower monthly payment and approximately $152 less in total loan payments because of the enormous financing-rate difference.

The example is illustrative, not representative of every transaction. Promotional APRs are limited to eligible vehicles and borrowers, and actual financing offers vary by automaker, model, location, creditworthiness and loan term. But it demonstrates why consumers should compare the complete deal rather than simply the vehicle prices.

Why New and Used Rates Can Be So Different

One important advantage available in the new-car market is manufacturer-subsidized financing. Automakers can use captive finance companies to offer promotional APRs on select vehicles as an incentive to generate sales. Comparable manufacturer financing incentives are much less common on used vehicles.

Risk also matters. Used vehicles represent different collateral and credit risks for lenders, and the mix of borrowers in the new and used markets differs. Those factors contribute to higher average used-car financing rates.

Creditworthiness can magnify the difference. Experian reports that near-prime borrowers, those with VantageScore credit scores from 601 to 660, averaged 9.67% APR on new vehicles compared with 14.03% on used vehicles in Q1 2026. Subprime borrowers purchasing used vehicles faced an average 19.42% APR.

For those consumers, financing can dramatically change what constitutes an affordable vehicle.

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CarEdge is a leading car consumer advocacy platform dedicated to empowering car shoppers to make confident, informed and financially savvy decisions. With trusted resources that includes AI agent shoppers, a Car Dealer Transparency Index, and hundreds of guides and videos on YouTube, CarEdge is redefining transparency, fairness and value in the automotive industry. Connect with him at www.CarEdge.com or on social media on   YouTube, TikTok,  X, Facebook, and Instagram.

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Contact: Karen Hayhurst, Media Relations

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