Maintenance Costs

• Maintenance costs can really add up on some models, and it is always a good idea to research the average cost of upkeep before deciding on a make and model. If you have your heart set on a car with high maintenance costs, you could be better off buying that car new from a dealer if it includes free scheduled maintenance as part of the package. You should also consider that older used cars can be more costly to maintain than new ones since they are more prone to breakdowns and failed parts. You will, of course, need to determine if those increased maintenance costs exceed the price differential between a new and used vehicle.
  
  

Financing Considerations

• The percentage rate on a new car loan can be considerably lower than the percentage rate on a used car loan. If you plan to finance your new wheels, you need to run the numbers and see which option is cheaper in the long run. Even if the sticker price on the new car is higher, the total cost could be less if there is a big difference in the financing rate. You can use a car loan calculator (see Resources) to determine the total price of the new and used vehicle. Just plug in the purchase price of the car, the length of the loan and the interest rate.
  
  

Depreciation

• New cars depreciate rapidly, from the moment you drive them off the lot. When comparing the cost of a new car versus a used one, it is always good to check the level of depreciation. The easiest way to calculate the depreciation you are likely to experience is to look up the value of a one-year-old car of the same make and model. If you expect to experience significant deprecation from day one, it might be better to buy a low-mileage used car of the same model instead of a brand-new vehicle.
  
  

Resale Value

• Resale value is an important consideration when buying any car, since you will eventually have to trade that car in or sell it. Whether the resale value is better on a new car or a used one will depend on a number of factors, including the make and model of the car and the state of the car market. You can research resale values by using guides like Kelly Blue Book, Consumer Reports and Edmunds. If you can find a new car that holds its value consistently over the time period you plan to keep it, it might be better to buy that vehicle new. Otherwise, looking at used cars is probably the wisest decisions.