Edmunds: When to buy new instead of used
A rule of thumb for car buying is that a used vehicle will provide greater savings and better value than a new vehicle. But “better value” isn’t applicable to every car, especially right now.
COVID-19′s effect on the auto industry has been twofold. For one, shoppers are aiming to spend less on a vehicle, often by buying used. Additionally, there’s less new car inventory because of factory slowdowns, furthering used car demand.
Used vehicle prices have increased as a result. The average list price for all used vehicles climbed to $21,558 in July, marking a $708 increase compared to June, according to Edmunds data.
These trends are creating situations where buying a new vehicle could be a better deal than buying a 1- or 2-year-old used version of the same vehicle.
WHY PAY THE EXTRA FOR NEW?
There are a number of reasons to pay that small difference and opt for the new model:
— Interest rates will always be less expensive for a new car by a few percentage points.
— Incentives, such as manufacturer cash-back deals, will also be more prevalent on a new vehicle.
— You will be getting the full balance of the new car warranty rather than whatever is left on the warranty for a used model.
— If you’re buying a recently redesigned new model, it will typically hold its value better than a used model from the previous generation.
Edmunds’ experts have selected six vehicles to showcase how buying new rather than used could be advantageous. We’ve pointed out what it costs to buy new and how that compares to buying a slightly used model. Finally, we’ve provided some notes on each model to provide context and help you decide the best option for you.
Average price (used 2019): $34,477
Average price (new): $35,626
Added cost to buy new: $1,149
Buying notes: The current revived Chevrolet Blazer has only one used model year. While Edmunds’ editors haven’t given it top marks, this midsize SUV is nonetheless holding its value well. As such, you’re not getting much value in opting for a used 2019 Blazer, which is priced only about $1,100 less than a new model.
CHEVROLET SILVERADO 1500
Average price (used 2019): $40,942
Average price (new): $43,951
Added cost to buy new: $3,009
Buying notes: This current-generation Chevrolet Silverado 1500 pickup debuted in 2019, and used vehicle prices remain strong. You’ll save more money on the 2018 and older models, with prices dropping dramatically. Savings from new are an average of $8,942 for a 2018 Silverado 1500 or $10,230 for a 2017.
Average price (used 2017): $31,140
Average price (new): $33,854
Added cost to buy new: $2,714
Buying notes: The Dodge Charger is a bit unusual. The 2019s are seeing significant discounts due to an influx of vehicles coming off rental fleets. But let’s say you were looking at a 2- to 3-year-old Charger. In this case your savings would only be $3,000 off the average price of a new vehicle. The Charger has wide appeal as a sedan with roomy seating and performance-oriented models that have powerful V8 engines.
Average price (used 2019): $20,641
Average price (new): $22,906
Added cost to buy new: $2,265
Buying notes: Honda Civics have always held their value well. Edmunds data shows that you have to go at least three years out on a used model to start seeing significant savings over buying new. But by then, the vehicle will have more miles and you’d almost be out of the warranty coverage.
TOYOTA RAV4 HYBRID
Average price (used 2019): $32,713
Average price (new): $35,475
Added cost to buy new: $2,762
Buying notes: The current-generation Toyota RAV4 Hybrid SUV debuted in 2019. The discounts are not significant for the used model. But like the Silverado mentioned earlier, the prices for the previous-generation RAV4 Hybrid drop dramatically. On average, a 2018 model is $8,542 less — and a 2017 $10,922 less — than a new RAV4 Hybrid.
Average price (used 2019) $35,107
Average price (new) $36,294
Added cost to buy new: $1,187
Buying notes: The Toyota Tacoma midsize truck is known for its strong resale value, and there aren’t many savings to be had on 1- to 2-year-old models. Even a 3-year-old model will have an average savings of less than $4,000. Buying a new Tacoma can maximize your Tacoma ownership experience.
EDMUNDS SAYS: It’s a seller’s market now and a used vehicle might not always be the best deal for you. Keep an eye on new vehicle prices to see how the pricing compares and give yourself the most options when shopping.
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