Edmunds.com reports that the deals on some new cars are so generous that they actually make the new car less expensive than the one-year old used version of the same model.
“Compared with new vehicles sales – which are at lows unseen in decades – the used car market is doing well,” observes Edmunds.com CEO Jeremy Anwyl. “Desirable used vehicles are becoming harder to find, pushing up their prices, while today’s new cars are heavily discounted. This is creating an unusual economic event: It can actually be less expensive to purchase a new car than a used car.”
To perform this analysis, Edmunds.com compared the vehicles’ True Market Value® transaction prices and the interest payments typically made for each vehicle. Because used cars generally are financed at a higher rate than new cars, a shopper can save as much as $795 by purchasing the new vehicle instead of the used one.
Some automakers are currently offering special finance rates among the incentives offers they use to attract buyers. When applying the appropriate special finance rates being offered as incentives for new car purchases, Edmunds.com found the savings rose as high as $6,175. Edmunds.com estimates that approximately 18 percent of new car buyers qualify for the special finance rates offered by automakers.
“Never underestimate the cost of the interest on a loan, and never forget that if you have decent credit, you may be able to negotiate the interest rate you are offered,” recommends Edmunds.com Senior Consumer Advice Editor Philip Reed. “Car shoppers should look at all the costs of buying a car, not just the purchase price.”