If you do choose an older used car, Mr. Preston said — five years old or more — keep in mind that it is unlikely to be covered by a manufacturer’s warranty. So choose a model with a history of reliability and have a mechanic check it out before buying.
The average price of the new cars included in AAA’s 2023 study, based on the manufacturer’s suggested retail price, is about $35,000, up 4.7 percent from last year, while the average annual finance charge almost doubled, to $1,253, AAA found. The report projects new cars will depreciate by an average of $4,538 per year over five years of ownership, up 24 percent over 2022.
(The higher depreciation reflects the slipping used car prices and high new car prices. “You pay more, but it’s worth less,” Mr. Brannon of AAA said.)
The report, based on information from the automotive data researcher Vincentric and other sources, used the five most popular 2023 models in nine categories, excluding luxury cars. It estimates the cost of using a new car over five years and 75,000 miles, considering costs for fuel and maintenance, insurance, license and registration fees, taxes, and depreciation. It doesn’t include the cost of parking, which can add hundreds or thousands of dollars to the cost of car ownership if you live in a big city.
Other analyses show new-car prices to be even higher. Kelley Blue Book, a unit of Cox Automotive, said the average transaction price for a new car — what buyers actually pay — was about $48,500 in August, roughly flat with a year earlier, held in check by growing inventories and incentives like cash-back rebates. (Kelley’s figure includes luxury cars, like those from Audi and Mercedes-Benz, which have raised prices.)
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