Posted: Jul 7, 2010 8:34 AM by Bea Karnes, News First 5
Updated: Jul 7, 2010 8:37 AM
You've heard the advice for years--buying a used car is a better value than buying a new car because the value drops as soon as you drive off the lot.
But a careful crunching of numbers by Consumer Reports and Edmunds.com found the opposite true--it's now cheaper or the cost is the same to buy new.
The reason? The cost of used cars is rising while the cost of financing new cars has dropped.
Jessica Caldwell, an analyst at Edmunds.com said, "We've been looking at this data for the past year and a half...since the recession hit."
Analysts at the auto-sales research site say the recession has driven up demand for used cars. That has driven up sales prices by as much as 11.5% percent.
And they just can't compete with the much lower costs of financing a new one. Caldwell said, "Low finance programs like 0% financing for 60 months or $5,000 cash back, when you do the math and when you look at the payments over the course of the loan, it looks as if a new car could be cheaper than a used car."
Edmunds found 93 models that were cheaper or about the same new as buying a year-old used one.
Their research is supported by Consumer Reports. The price gap between new and used cars has been narrowing for about 18 months now.