You may have heard that driving a brand new car off of the lot immediately depreciates the car. This is true and is found in all types of cars. Despite this, there are some cars that may be worth it to buy new. For example, the Tesla Model 3 was found to have the smallest price difference between new and used versions, but this was based on the condition of the vehicles as well.

The average one-year-old used car depreciates 17% from the new version. It is good to note that this is the average, as some may have as little as a 2.1% price difference. On the opposite end, some others had prices as high as a 36.4% difference. This may be due to plant shutdowns during COVID-19, which led to high car prices and less supply of vehicles that were in demand.

Other examples might surprise you, and include pickup trucks and luxury sedans. Pickup trucks are some of the most commonly purchased used vehicles overall but known as better to buy new because of the demand. But how does this impact you, and should you consider these trends when purchasing your next car?

Who Should Buy a New Car?

If you are someone who likes all the newest tech, then a new car might be for you. The factory warranty is intact, and there will never be unknown accidents that have occured. New cars also offer low financing rates for qualified buyers, and reduced maintenance costs for at least two to three years.

On the other hand, buying a new car means more expense, depreciation as soon as you drive off the lot, and unknown reliability for the model year. There could be recalls and dangerous situations that occur. There is also higher tax and insurance costs that come along with a new car as well.

How Old to Buy a Used Car?

If you decide to buy a used car, generally experts have stated that buying a used car at five years of age is the best option. This minimizes depreciation and maximizes reliability for how much you will pay. Despite this, a five year old car is not something that everyone wants. You may have to pay a lot later to fix the car, and resale value will be almost nothing. This is why a few years is a better option. This provides lower costs while still giving a great value and new technology.

Where the Data Comes From

In a study analyzing 2.6 million cars, there were various conclusions found on which cars were the best to buy new and used. All the cars examined were sold between August 2020 and mid-March 2021.  New cars were from both 2020 and 2021, and used cars were defined as used cars from 2019-2020. Any cars with either high or low mileages were not included in the data set, as well as any models discontinued as of 2020.

Best Cars to Buy New

Generally buying a brand new car is seen as a luxury and poor financial decision/ Despite this, there are some cars with small price differences that grant purchasing new versus gently used. For example, some of the cars examined had at least 1.5 times less than the average car. Because of such a small change between the new and used versions, it becomes more worth it to purchase them new.

For example, there are seven pickup trucks, five SUVs, one SUV hybrid, one electric vehicle, one sports sedan, and one hatchback that should be purchased new rather than used. The Tesla Model 3 tops the list with only a 2.1% price difference after one to two years of use. This is only a savings of $923. This is interesting because in 2020 The Tesla Model 3 was given a $2,000 new car price cut.

This closed the gap even further. It also shows that Tesla holds its value better than other vehicles due to being in high demand. The Toyota Tacoma came in quite a bit below, at a 4.2% difference and $1,557 difference in price. This is thought to be due to many truck-producing plants being shut down in 2020 due to the pandemic. Because pickup trucks are extremely useful (and often used for work) the demand remained and led to a shortage.

On the other end, the Chevy Silverado had an 11.2% difference, at $5,072 difference between new and used versions. For many, this might be a huge difference and worth purchasing the lightly used version. Even a $3,373 difference at 7.1% in the Jeep Gladiator might be worth purchasing the used version for many consumers.

Despite this, when purchasing a Honda Civic Hatchback the price reduced 8.9%, but with a difference of only $2,309, is it worth the difference? This compact vehicle was introduced originally in 2017 to offer more room than its predecessors. It is a popular vehicle, but is it worth the under $2,500 savings? This is something you will have to decide for yourself as a consumer.

Best Cars to Buy Used

The best cars to buy used tend to be luxury vehicles. This is mainly because they significantly will lose their value within the first one to two years after release. The BMW 3 Series also lost over $15,000 of its value which makes it an ideal car for purchasing used. BMWs are actually known for being the best choice to purchase one to two years old.

For example, with savings ranging from $13,420 for the Mercedes-Benz CLA to the BMW 5 Series which lost 36.4% of its value in the first few years after release as a used vehicle. This meant a price reduction of $24.207. This makes it completely worth it to purchase used. It is thought that these price drops are due to the reduction in the popularity of sedans. Many luxury car buyers are looking more into SUVs.

Although not quite the same monetary value as the BMW 5-Series, the Hyundai Sonata also lost 36% of its value with a loss of $9,898. This is a great value and makes it ideal to buy used. The same can be said for the Infiniti Q50. Used models acme in at an average of $16,322 less meaning they were 34.9% devalued. This is similar to the Mitsubishi Eclipse Cross. Reducing 31.6%, these cars cost an average of $8,041 less.

Because these cars were on the lower end, to begin with, this is a huge monetary amount for someone looking in this category. As one of the non-luxury sedans in this study, it is interesting to compare it to the Nissan Sentra and the Mitsubishi Mirage G4. These sedans tend to not sell, which means they are not used.

They completely redesigned them with additional savings already, which makes sense why the prices may not change much. What was interesting is that two subcompact SUVs, the Mercedes-Benz GLA and the midsize Cadillac XT5 were on this list as well. The GLA was redesigned for the new year of 2021, and this meant that the used generations are cheaper than that of the current model. The GLA could be found for 30.9% less and about $13,562 on average in cost.

Buying Used Cars by Different Locations

Purchasing a Mercedes in San Francisco is going to be a completely different experience than doing so in New York City. This is because used car prices vary based on geographic area. For example, the car with the smallest price difference in most cities is the Toyota Tacoma. This is actually the smallest difference between new and used in 21 cities. In Albuquerque-Santa Fe, NM, the Toyota Tacoma is the best to buy new, while the BMW 5 Series is the best to buy used. When it comes to the Hyundai Sonata, there is the largest price difference between new and used in 15 cities.

In Austin, TX the Hyundai Sonata is the best to buy used, while the Toyota Tacoma is the best to buy new. In some cases, there are more upfront savings of buying a new car because finance rates and rebates on new models are present. Despite this, sometimes buying used can provide a lot of savings, such as with the Infiniti Q50 in Baltimore, MD. This is the best car to buy new here, while the Toyota Tacoma is still the best to purchase used.

In Atlanta, GA the Ford Ranger had only a .3% difference and therefore was the best to buy new, but the Infiniti Q held strong at a 38.8% difference, meaning it was best to buy used at an incredible value. This is the opposite in another part of the south, Birmingham, AL. Here the Toyota Tacoma only had a 2.4% difference, and the Nissan Sentra had a 25.9% making it the best to purchase used. Another car that is great to buy new is the Jeep Gladiator in Boston, MA-Manchester, NH. This has a 2.7% difference which is still pretty good as compared to the Hyundai Sonata that loses 38.8% of its value after a few years on the used market.

Similar situations can be found in Charlotte, NC, with the Toyota Tacoma on the new end and Infiniti Q50 on the user end. When it came to larger cities, such as Chicago, the Jeep Gladiator was the best to buy new with only a 2.3% increase. The BMW 5 Series happened to be the best to buy in Chicago, with a 36.6% decrease in price after only a few years.

Three different cities in Ohio, Cincinnati, Cleveland, and Columbus had quite similar situations when it came to which cars were best to buy new, and used. Cincinnati and Cleveland had the Toyota Tacoma as the best car to buy new. The difference is that in Cleveland it was a -11% difference and in Cincinnati a 3.3% difference. In all cities, the Hyundai Sonata was the best to buy used with around 30-34% difference from new to used.

Buying Used Versus New

Buying a new car can provide you the opportunity to have new technology. This allows you to have the best of the best, but the key point is, only if you can afford it. Buying a car that is lightly used can ensure that you get a higher quality car within your price range. Rather than settling for a new and basic sedan, you may be able to afford a luxury SUV. The only catch is that it is a few years old.