New vs Used Car Calculator

What this computes

"Buy used, it's cheaper" is a slogan, not a calculation. The real answer depends on three things at once: how much the new car loses to depreciation, how much less the used car costs up front, and how much more the older car costs to keep running. This tool nets all three against each other over the years you actually plan to own the car.

For each option it projects resale value, computes the depreciation you absorb over the hold, adds maintenance and insurance, and reports a single total cost — plus the "new premium": the extra dollars per year buying new really costs you, after the slower-felt used depreciation is accounted for.

The math

Resale value uses a declining-balance curve, and depreciation is the value you lose over the hold:

resale value = price × (1 − rate)^years
depreciation = price − resale value

Each option's total cost over the hold is then:

total = depreciation + (maintenance/yr × years) + (insurance/yr × years)
cost per year = total ÷ years

The decision comes from the difference newTotal − usedTotal: positive means new costs more (used wins). Dividing that gap by the years gives the new premium per year — the cleanest single number for the question "what does insisting on new cost me annually?"

A worked example

New car $38,000 depreciating 17%/yr; comparable 3-year-old used $26,000 depreciating 12%/yr; held 6 years. New: $600/yr maintenance, $1,700/yr insurance. Used: $1,100/yr maintenance, $1,400/yr insurance.

• New resale ≈ 38,000 × 0.83⁶ ≈ $13,200, so depreciation ≈ $24,800.
• Used resale ≈ 26,000 × 0.88⁶ ≈ $11,600, so depreciation ≈ $14,400.
• New total ≈ 24,800 + 3,600 + 10,200 ≈ $38,600.
• Used total ≈ 14,400 + 6,600 + 8,400 ≈ $29,400.

Used wins by roughly $9,000 over six years — about $1,500/yr — even though the used car costs more to maintain. Depreciation, not the repair bill, is the swing factor.

You pay for the word "new" once, almost entirely in year one — and it's usually the most expensive word in the transaction.

The depreciation cliff

A car doesn't lose value linearly. It falls off a cliff in year one — typically 15-25% — then declines more gently. That first-year drop isn't extra wear; it's the loss of new-car pricing power, and it lands the instant the car is titled regardless of mileage.

This is the entire case for buying used. A 2-3 year-old car has already shed the cliff, so its depreciation curve over your ownership period is dramatically flatter. You buy the same usable car and let the first owner pay the most expensive years. The higher maintenance and slightly different insurance of an older car rarely erase that head start — which is why used wins in most realistic scenarios, and why it's worth checking the cases where it doesn't.

How to use this

1. Set the years you'll actually keep it. The shorter the hold, the more the year-one cliff dominates and the more used wins. Very long holds (10+ years) narrow the gap.
2. Calibrate the depreciation rates to your model. Look up real used prices for your car at 1, 3, and 5 years. Strong-resale trucks and brands hold value (lower rate); many luxury sedans and some EVs drop faster (higher rate).
3. Be honest about maintenance. Out-of-warranty cars cost more to keep running. Put a realistic number on the used car or you'll overstate its advantage.
4. Watch the new premium per year. That's the price of insisting on new. If it's small, new's warranty and zero-hassle years may be worth it. If it's large, the used discount is doing real work.

What this calculator doesn't model

• Financing. Used-car APRs typically run 1-3 points above new, and a subsidized 0% new-car offer can flip the math. Compare the loans separately with the Auto Loan calculator and add interest to the picture.
• Repair risk and reliability spread. The used maintenance figure is an average; a specific older car can be far better or worse. A CPO warranty narrows that risk — model it with a higher price but lower maintenance.
• Mileage and condition. Resale here is time-based; a high-mileage car depreciates faster than the curve shows.
• Fuel and the rest of ownership. This isolates the new-vs-used decision. For the full picture across fuel, registration, and financing, use the True Cost of Ownership calculator.