Getting Started
New vs Used — Which Should You Buy in 2026?
The first decision every buyer faces is new versus used. Both have strong arguments in 2026 — used car prices have normalized after the pandemic spike but remain elevated, while new car incentives and financing offers have improved significantly.
| Factor | New Car | Used Car |
|---|
| Price | Higher — avg $48,763 in 2026 | Lower — avg $27,186 in 2026 |
| Depreciation | Fastest — 15–25% first year | Previous owner absorbed the hit |
| Reliability | Full warranty, latest tech | Varies — CPO offers protection |
| Financing | Manufacturer rates as low as 0–2.9% APR | Typically 7–12% APR |
| Insurance | Higher premiums | Lower premiums |
| Customization | Order exactly what you want | Limited to available inventory |
| Best For | Long-term keepers, brand loyalists | Budget-conscious buyers, value seekers |
💡 Best Value Sweet Spot: A certified pre-owned (CPO) vehicle that is 2–3 years old with 25,000–40,000 miles offers the best of both worlds — most depreciation already absorbed, manufacturer-backed warranty, and significantly lower price than new.
Financing
Car Loan Rates and Financing in 2026
Auto loan rates in 2026 vary significantly based on credit score, loan term, and whether you're buying new or used. Understanding financing is critical to calculating the true cost of ownership.
| Credit Score | New Car Rate (avg) | Used Car Rate (avg) |
|---|
| Excellent (720+) | 5.5%–7.0% | 7.0%–9.0% |
| Good (680–719) | 7.0%–9.5% | 9.0%–12.0% |
| Fair (640–679) | 9.5%–13.0% | 12.0%–16.0% |
| Poor (580–639) | 13.0%–18.0% | 16.0%–21.0% |
| Very Poor (below 580) | 18.0%–25.0%+ | 20.0%–29.0%+ |
⚠️ The Loan Term Trap: A 72 or 84-month loan has a lower monthly payment but costs thousands more in interest and puts you at risk of being underwater — owing more than the car is worth. Try to keep loan terms to 60 months or less.
How Loan Term Affects Total Cost ($35,000 at 7.5%)
| Loan Term | Monthly Payment | Total Interest Paid |
|---|
| 36 months | $1,088 | $3,168 |
| 48 months | $847 | $4,256 |
| 60 months | $701 | $5,060 |
| 72 months | $601 | $6,272 |
| 84 months | $531 | $7,604 |
FAQ
Car Buying FAQ
What is the best time of year to buy a car?
The best times are the last few days of a month (dealers pushing to hit monthly quotas), the end of a quarter (March, June, September, December), and the end of the year (December when dealers clear inventory for new model years). Monday through Thursday visits tend to yield better deals than weekends when dealers are busiest. Holidays like Memorial Day and Labor Day often have manufacturer incentive programs but showrooms are busy — negotiate everything via email first.
Should I tell the dealer I'm paying cash?
Counterintuitively, no — not initially. Dealers make profit from financing arrangements, so revealing you're paying cash can cause them to become less flexible on the vehicle price. Negotiate the vehicle price first, then reveal your payment method. If you have pre-approved financing, compare the dealer's financing offer against your pre-approval before committing to either.
How much should I put down on a car?
Aim for at least 20% down on a new car and 10% on a used car. A larger down payment reduces your monthly payment, total interest paid, and the risk of being underwater on the loan (owing more than the car is worth). If putting 20% down is not possible, a minimum of 10–15% is recommended to stay ahead of depreciation, especially on a new vehicle.
Is it worth buying an extended warranty?
Manufacturer-backed extended warranties (CPO warranties) can be worth it for luxury or reliability-questioned vehicles. Third-party warranties from dealerships are almost always overpriced and have restrictive fine print. If you want an extended warranty, price it from the manufacturer directly rather than through the dealership finance office where markups are significant. For highly reliable vehicles (Toyota, Honda, Mazda) an extended warranty is rarely cost-effective.