Should you buy a new or used car right now?

Where the averages stand right now

Q1 2026 lending data from Experian gives a clear, if incomplete, starting point. The average new-car payment was $770 a month, financed at an average APR of 6.39%. The average used-car payment was $531 a month, financed at an average APR of roughly 11.43%. New cars carry cheaper money. Used cars carry a cheaper starting point. Those two facts pull in opposite directions, which is exactly why there’s no universal right answer.

What buying new actually gets you

A new car comes with the full manufacturer warranty from day one, the newest available safety and driver-assist features, and financing at meaningfully cheaper rates than a used-car loan carries on average. You also know the complete history, there’s no prior owner’s maintenance habits to guess at. The tradeoff is the payment: at Q1 2026 averages, new buyers are financing substantially more car, and depreciation is steepest in the first years of ownership.

What buying used actually gets you

A used car, especially one a few years old, has already absorbed its steepest depreciation, which is a big part of why the average used payment runs well below the average new payment. The tradeoff shows up in the financing: used-car loans average a materially higher APR than new-car loans, which raises the cost of every dollar you borrow, and warranty coverage may be shorter, expired, or dependent on a certified pre-owned program rather than the full factory term.

The financing math that decides more than the sticker does

The APR gap matters more than it looks like on paper. A loan’s interest is a percentage of what you still owe, so a materially higher rate on a used-car loan, roughly 11.43% average against 6.39% for new, means a larger share of every used-car payment goes toward interest rather than principal, for as long as the loan runs. That doesn’t automatically make new the cheaper overall choice, the used car is financing a smaller amount to begin with, but it does mean the “used is always cheaper” assumption isn’t automatic once financing enters the picture. The only way to know which wins for your situation is to run your actual numbers, at your actual credit-based rate, side by side.

The risk each path carries that the other doesn’t

Buying used adds a diligence burden buying new skips, you’re trusting someone else’s maintenance record, which is exactly why an independent inspection before you buy is worth the money regardless of price. Buying new adds a different risk, you’re paying full retail for a car that will lose a meaningful share of its value in the first few years no matter how well you maintain it, a cost you can’t inspect your way around. Neither risk is hypothetical, and neither is a reason to rule out a path entirely, just something to price in.

Where national averages mislead you personally

These are national averages, not a quote for you. Your credit score moves your real APR up or down from either average by a wide margin. Your down payment, loan term, and the specific car you’re looking at move the payment further still. The average used payment being lower is partly a rate story and partly a story about used cars simply costing less to begin with, which means comparing “the used payment” to “the new payment” without also comparing the actual vehicles is comparing two different decisions, not one.

A simple way to decide, step by step

Work through it in order rather than starting from either average. Decide your ceiling first, using your own budget, not either national number. Get preapproved for both a new-loan quote and a used-loan quote so you know your real rate on each. Price one specific new car and one specific used alternative to the same out-the-door basis. Weigh warranty and depreciation exposure against payment size for how long you’ll actually own the car. Pick the one that clears your budget with room to spare, not the one that just barely fits.

Mistakes buyers make chasing the “safe” choice

The first mistake is assuming used is automatically the frugal choice without checking the loan rate you’d actually qualify for, a high used-car APR can erase more of the savings than expected. The second is assuming new is automatically wasteful without checking whether the warranty and lower default risk are worth the payment gap for your situation. The third, common to both paths, is shopping the payment instead of the total cost, which is exactly the mistake that makes a bad structure look like a good deal.

Certified pre-owned as a middle path

Between straight new and straight used sits certified pre-owned, a manufacturer-backed program that extends warranty coverage on a used vehicle beyond what you’d get buying the same car privately or from an independent used lot. It typically costs more than a comparable non-certified used vehicle and less than new. If warranty coverage and peace of mind are the main things pulling you toward new, pricing out the certified pre-owned version of the same model is worth doing before you commit either direction, it can capture some of what you want from each path.

How long you’ll actually keep the car changes the math

Depreciation is front-loaded on new cars, which means the math shifts the longer you hold one. A new car held for many years spreads its steepest depreciation years over a longer ownership period, softening its bite. A new car traded in quickly re-exposes you to that same steep depreciation on the next purchase too. If you tend to trade every few years, that pattern favors used more strongly than if you’re the type to keep a car until it’s genuinely done.

Insurance and maintenance aren’t in the averages above

The payment and APR figures above cover financing only. Insurance premiums, maintenance, and repair costs sit on top of either path and can move enough between a specific new model and a specific used one to matter in the decision. Quote insurance on the actual vehicles you’re considering, not a generic assumption that new always costs more to insure, before finalizing either direction, since the gap is sometimes smaller than expected and sometimes larger.

Why the “right now” in this question matters

Loan rates and used-market pricing shift over time, which is exactly why this comparison is worth rerunning close to when you actually buy rather than trusting a number from months earlier. The structure of the decision, warranty and rate against payment and depreciation, stays the same, but which side wins for you can shift as rates and used-vehicle values move.

The verdict

Choose new if the warranty, latest features, and cheaper average financing outweigh a higher payment for you, and if you plan to keep the car long enough for the depreciation hit to matter less. Choose used if a lower payment and a car that’s already taken its steepest depreciation loss matter more, and you’ve checked what rate you actually qualify for on a used-car loan, not the new-car average. Either way, get preapproved before you shop so the number you’re comparing against is real, and compare out-the-door totals, not payments, once you’ve picked a lane.

Next steps

Pull your credit and get preapproved so you know your real rate on both a new and a used loan, not the national average. Price out one specific new car and one specific used alternative on the same out-the-door basis. Then compare the two real numbers, not the two averages, before you decide which one actually fits your budget.