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Buying a New or Used Car Calculator

Last updated 23rd Sep 2022

You can use this calculator to help you compare the costs of buying a new car versus a used car. The calculator takes into consideration factors such as the depreciation in value of each car, maintenance costs, as well as how long you want to own the car. Using that information, it determines the monthly cost of ownership for buying a new versus a used car.

Calculator Definitions

The variables used in our online calculator are defined in detail below, including how to interpret the results.

Purchase Price of Car ($)

This is the purchase price of the car that you have negotiated with the dealership or private seller. This figure should include all rebates and other costs associated with the purchase.

Down Payment ($)

If you are lowering the amount you're going to finance by providing a cash down payment, then enter that amount here.

Annual Interest Rate (%)

This is the annual interest rate on the automobile loan. This is not the APR, which takes into account other costs associated with the loan. It is very likely the interest rate offered on a new car will be lower than that of a used car.

Term of the Loan (Years)

The term of the loan is the number of years over which the loan will be paid. The most common car loan terms are 3, 4, and 5 years.

Maintenance Cost ($ / Month)

This is the expected monthly maintenance cost for a new or used car. Since new cars are usually covered by a manufacturer's warranty, the expected monthly maintenance cost is usually lower than a used vehicle's. In addition, the components in a new car are less likely to break down than those in a used car.

Years of Ownership (Years)

This is the number of years that you expect to own this vehicle.

Net Amount Financed ($)

The net amount financed is calculated by taking the purchase price of the car and subtracting down payments.

Monthly Payment ($ / Month)

This is the monthly payment necessary to repay the car loan over its lifetime.

Remaining Principal ($)

This value is the remaining principal or outstanding balance owed on the car loan. This value has no impact on the cost of ownership, but is used to calculate interest charges.

First Year Depreciation ($)

This is the first year's estimated depreciation for the vehicle. As a general rule, new cars tend to lose more value in their first year of ownership versus used cars. This calculator uses an average depreciation rate, and assumes that the new and used vehicles are similar in overall quality.

Total Depreciation ($)

This is the total depreciation, or decline in the car's market value, during the time the vehicle is owned. Keep in mind this is an estimate based entirely on the age of the vehicle. Other factors such as the condition of the car and the number of miles on the vehicle can significantly impact its value.

Total Interest Paid ($)

The total amount of interest charges over the term of the loan. This is the cost of borrowing money from the lending institution. The value is found by subtracting the reduction in principal from the total of all payments.

Total Maintenance Costs ($)

The total auto maintenance costs are determined by multiplying the monthly maintenance estimate by the years of ownership.

Total Cost of Ownership ($)

This is the total cost of ownership (TCO) for the vehicle over the time which the car was owned. This includes an average depreciation rate, interest paid on the car loan, and maintenance expenses.

Cost of Ownership ($ / Month)

Since the calculator allows the user to input different lengths of ownership, the total cost of ownership cannot always be compared directly. That is, if the new car is owned for three years versus two years for the used car, the total cost of ownership will reflect costs only for the time the car is owned. However, by comparing the cost of ownership in $ / Month, a more direct comparison can be made, even if the new and used cars are owned for different time periods.

Buying a New or Used Car Calculator

Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor. The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.

Moneyzine Editor

Moneyzine Editor