Buying a new car can be cheaper than buying used
Prices for used cars are surprisingly high, and in some instances it might be less expensive to purchase a new vehicle, according to auto information company Edmunds.com.
One reason is that automakers often subsidize the interest rate on a loan for a new car. Used-car loan interest rates are typically higher.
Edmunds says this scenario plays out for a number of vehicles, including some luxury cars such as an Audi or a BMW. For example, the payment on a new manual-transmission BMW 128 coupe would be $506 a month assuming no down payment and a 60-month loan. The payment on a 1-year-old 128 coupe, also without a down payment, would be $534, Edmunds estimated, based on a review of transaction prices and interest rates.
Overall, Edmunds said, the average price of a 3-year old car is 11.1% higher than it was last year, which it called “a remarkably high year-over-year increase.”
Used cars of all ages are 5.5% more expensive than they were last year. Typically, the year-over-year increase is less than 3.5%, Edmunds said.
“Frugality is in fashion, and a used-car purchase looks and feels more thrifty,” said Jessica Caldwell, an Edmunds analyst.
“However, a number of people are researching used cars on our site but then ultimately buying a new car, swayed by the limited used inventory available and the minimal difference between the prices of lightly used cars and their heavily incentivized new counterparts,” Caldwell said.
General Motors Co., which emerged from bankruptcy last year, has seen its used-car prices rise 7.8% in the last year, mostly because of the automaker’s full-size trucks and SUVs.
During the same period, prices of used cars from Honda increased only 2.3% and Toyota’s declined 0.9%, Edmunds said. Still, it said, those makes have among the best resale prices in the industry.
