Buying your first car: new vs used vs lease
The monthly payment is half the story. Insurance, gas, maintenance, depreciation — that's the other half.
20–30%
Year-1 depreciation on a new car
A $30k new car is worth ~$22k after one year — the steepest depreciation in the car's life.
The 20/4/10 rule
- •20% DOWN — protects you from being underwater on the loan.
- •4-YEAR loan max — anything longer means you're financing depreciation.
- •10% of TAKE-HOME — total transport (loan + insurance + gas + maintenance) ≤ 10% of NET.
New vs used vs lease
- •NEW — most expensive, takes the depreciation hit, full warranty.
- •USED 2–4 years old — depreciation already taken, reliability data exists, often the math winner.
- •LEASE — predictable monthly, no equity, mileage caps, must turn it in.
- •CPO (certified pre-owned) — used + manufacturer warranty extension, usually 1–3 year sweet spot.
Plug in price, APR, term, insurance/mo, gas/mo, maintenance/mo. See the 5-year all-in cost AND the true monthly cost (not just the payment).
Try it yourself
The monthly payment is half the story. See the real 5-year all-in cost.
5-yr payments
$32,702
5-yr operating
$22,200
True monthly cost
$682
5-year all-in cost: $40,902. Use the 20/4/10 rule: 20% down, 4-year loan max, transport ≤ 10% of take-home.
Real life: meet $28k new vs $17k 3-yr-old vs $329 lease
Same model: New ($28k), 3-yr-old used ($17k), or lease ($329/mo). 5-year all-in: New ~$36k. Used ~$25k. Lease ~$23k+turn-in. The 'cheap' lease loses you all the equity.
5-yr cost: New $36k · Used $25k · Lease $23k
Takeaway
Used 2–4 years old usually wins on math. Lease only if you genuinely don't want to own a car. New is fine — just go in with eyes open.
Why does a used 2–4 year old car often win on math?
Takeaway: Total cost of ownership is what matters — the monthly payment is only one of five major numbers.
Try together: Use the Car Total Cost widget to compare three real cars (one new, one used, one lease) and decide together which is the math winner.