The average price of both new and used cars has risen steadily in recent years, fueled by America’s appetite for large and expensive SUVs and trucks.
But while brand new and preowned vehicle prices have each been on the increase, the difference between the two is still significant.
The average new-car price was $37,285 in June 2019, according to Kelley Blue Book. By comparison, the average used-car price was $20,200 for the first quarter of the year, Edmunds data shows. Over the last five years, new-vehicle prices have risen by more than $4,000, with prices for used going up by $2,000.
The popularity of new SUVs has affected the average price of used cars as, in due course, more utilities have taken their place among preowned inventory. So too has a high number of off-lease vehicles entering the market. Used vehicles are now typically newer and lower mileage.
Taken together, these trends mean shoppers opting for a lightly used model may benefit most.
Besides the opportunity to make large potential savings after depreciation, buyers are able to choose from a range of well-equipped vehicles in good condition.
“With used inventory starting to mirror new in terms of available features, body types and mileage – all while presenting tremendous savings to shoppers – used vehicles are a more compelling alternative than they’ve ever been,” says Edmunds’ Q1 Used Vehicle Report.
How to work out what you can afford
Whatever type of vehicle interests you, it’s important to work out what you may be able to afford so you make a purchase that’s financially sound.
The uptick in vehicle prices has many buyers seeking longer auto loans in order to spread out the cost and keep monthly payments down. The average length of a loan is now nearly 69 months for new and 65 months for used vehicles, while some lenders are offering loans up to 96 months, or eight years.
If you’re planning to finance, be mindful that a longer loan duration typically means you’ll pay a higher total interest charge over the life of loan, which increases the cost of the car overall.
Try using auto loan calculators to work out what may work for your situation based on loan duration and other terms such as money down and interest rate. RoadLoans’ affordability calculator lets you estimate what you might pay for a car in total, while our auto loan calculator will give you a suggested monthly payment.
Try flexible financing options
When you’re ready to apply for a loan, RoadLoans makes it easy. We accept applications for new and used car financing with a simple online form. It takes only a few minutes to complete and you’ll receive a decision in seconds. As a full-spectrum lender, we work with customers with a broad range of credit types, including bad credit,* and co-borrowers, who share responsibility for both car and loan.
If approved, you’ll receive multiple offers tailored to your needs. Select the best option, print your loan packet and visit the preferred dealership listed inside. Alternatively, use our dealer locator to find another. We work with 15,000 dealerships across the country that are able to show customers select vehicles meeting our standards for age, mileage and financing, so they can shop with confidence.
Apply for a car loan online.
* “Bad” or “poor” credit generally is considered a FICO score around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Association (reported by the Associated Press), Bankrate.com, Credit.com, Investopedia, NerdWallet.com and others. The Congressional Budget Office identifies a FICO score of 620 as the “cutoff” for prime loans. FICO scores are not the sole factor in lending decisions by RoadLoans.com and Santander Consumer USA.