Compare the true 5-year cost of buying new versus used — purchase price, depreciation, interest, insurance, and maintenance — and see exactly which choice saves you the most money.
A new sedan at $35,000 versus the same model 3 years old at $22,000. The new car loses roughly $7,000 in year one alone — nearly as much as the used car loses in all 5 years combined. Total 5-year cost lands near $65,000 new versus about $43,000 used, a saving of roughly $22,000.
Heavy mileage accelerates depreciation for both, but it hurts the new car more in absolute dollars since a larger price is depreciating. Expect the used-car advantage to grow as mileage climbs — just verify the used car's service history first.
Luxury and EV models can lose 40-50% of their value in the first 3 years, making a 3-year-old example a bargain. But new EVs may qualify for tax credits, and tech improvements can matter. If you plan to keep the car 8+ years, buying new spreads the cost over a longer useful life — sometimes making new the winner.
M = P × r × (1+r)^n ÷ ((1+r)^n − 1)
M = Monthly payment
P = Loan amount (price − down payment)
r = Monthly interest rate (APR ÷ 12)
n = Number of payments (loan term in months)
Value after 5 years = Price × (1 − d₁) × (1 − d₂)⁴
d₁ = Year 1 depreciation rate
d₂ = Years 2-5 annual depreciation rate
Depreciation cost = Price − Value after 5 years
Defaults: new car loses 20% in year 1 and 15%/year after; a 3-year-old used car loses 15% in its first ownership year and 10%/year after. Both are editable.
Use the standard amortization formula for the new car and the used car separately, with their own prices, down payments, APRs, and terms.
If the term is 60 months or longer, count 60 payments (M × 60). If the term is shorter, the loan is paid off early — count M × n.
Apply the editable year-1 and years-2-5 rates to each purchase price to get the resale value after 5 years. Depreciation cost = price − resale value.
Multiply each annual insurance and annual maintenance amount by 5. New cars usually cost more to insure but less to maintain in the first years.
Total 5-year cost = loan payments in 5 years + depreciation + insurance + maintenance. The lower total is the better financial choice — and the resale values show what each car is still worth at the end.
The moment you drive a new car off the lot, it loses value — about 20% in year one and roughly 15% per year after. A $35,000 new car is worth only about $14,600 after 5 years, over $20,000 in depreciation alone. A 3-year-old used car has already absorbed the steepest part of that curve, so your depreciation runs a gentler 15% then 10% per year.
Because depreciation scales with purchase price, every dollar you save on the sticker price is a dollar that does not depreciate. It is usually the largest cost of car ownership — and the core reason buying used is cheaper over 5 years, even with higher maintenance.
Purchase price is only the beginning. Used car loans typically carry higher APRs because the collateral is worth less, and new cars cost roughly $200-400 more per year to insure. Maintenance flips the other way: new cars ride on warranty and cheap early service, while used cars average about $800 per year as parts age.
This calculator rolls all of it into one true 5-year cost of ownership figure. The used car usually wins on price, depreciation, and insurance; the new car wins on maintenance and financing. Test your own numbers — including 0% promotional APR on new models — to find the real breakeven.
Our new vs used car calculator compares the true 5-year cost of ownership for both options. All calculations run in your browser — no data is stored or transmitted.
⚠️ Disclaimer: This calculator provides estimates for educational purposes only. Actual depreciation, loan terms, insurance, and maintenance vary by make, model, mileage, location, and market conditions. Depreciation rates are editable defaults, not guarantees of future value. Always have a used car inspected by a qualified mechanic before purchasing.