When you’re looking to buy a new car one of the most important factors you’re going to consider whether buying a new car or a used car is the cost. However, it can be difficult to see all the different potential costs coming if you haven’t had to deal with them before. Looking at these costs is instructive in helping you decide whether you want to shop for a new car or a used car.

Upfront Car Costs

When you buy a car, there are going to be some costs that hit you right away. These are all mostly going to be more expensive for new cars than used cars.

The most obvious upfront cost is the purchase price. New cars are always going to have higher purchase prices than their used counterparts, but that doesn’t mean a used car is always going to be cheaper. If you decide to shop used, you could look at luxury vehicles or those at higher price points because your budget can stretch further.

Another upfront cost to consider is the registration cost. After you buy the car, you have to have it registered with your state’s DMV. New cars usually have registration costs a few hundred dollars more expensive than used cars.

Loan Rates

If you’re going to get a loan for your car purchase, you need to consider several other factors that will affect your expenditures. The first thing to consider is your interest rate because this will affect how much you have to pay per month to pay off the loan. This number will normally be affected by your credit score, with higher scores getting lower interest rates.

Another factor to consider is the length of the loan. While having a longer loan could mean your monthly payments are lower, stretching out the payments means you’re paying extra over time in the form of interest.

Costs For New And Used Cars

There are other monthly costs that are going to come out of your pocket on top of your loan payments. Each month you’ll also have to pay for insurance for, with new cars usually requiring higher payments. You should also plan to pay some amount for maintenance costs on the car. They won’t necessarily happen every month, but it’s a good idea to budget monthly for how much you might expect to pay. New cars have the advantage here as they have more warranty coverage and are usually less likely to have trouble as they have fewer miles.

Tax Rates

When looking at car costs, people often forget to consider the state tax rates. The exact percentage of the car value will differ depending on your state. In our home state of New Jersey, the tax rate is 6.625%, so our local clients can expect to pay that percentage on top of the purchase cost of the car.

Average Car Depreciation

Most people know that cars depreciate over time, but they’re often shocked by just how much of an impact depreciation can have. You may have heard that new cars lose 20% of their value as soon as they leave the dealership. However, you have to keep in mind that wear and tear over the first year will drop the value by at least another 10%.

Depreciation is one of the places where you’ll save the most money if you decide to buy used. This is because new cars have a higher starting value, so they have more value to lose. Say you bought a used car for $10,000 and want to sell it after 3 years. You could expect to sell it for a little under $7,000. If you buy a new car for $20,000 and want to sell it 3 years later, you would only get $11,000 back, because of the extra loss in value from the car being used now.

New and used cars both have their benefits and drawbacks, but if you’re trying to be cost-effective used cars will cost you about $800 per year. In fact, the National Automobile Dealers Association found that most people own 13 vehicles in their lifetime, with each car costing around $30,000. If those people all bought cars that were 3-years-old instead of brand new, they could save almost $130,000 over the course of their life. Shopping used really pays off.

If you’re shopping for a used Nissan in New Jersey then stopped by Royal Motors for the best prices in NJ! We accept all trades regardless of condition and with bank financing starting at 2.89% we’re able to accommodate most credit needs. Speak to our friendly team of experts at (856) 346-2121 or visit our location in Voorhees, NJ today!