5-year total cost comparison of a new car vs a used equivalent

Depreciation Is the Headline Cost

A new car loses 15-25% in year one and 10-15% in each of years 2-5. A three-year-old used car has already absorbed the steepest drop — subsequent depreciation averages 8-12% a year on the lower base. Over a five-year hold, the new car typically loses 50-60% of price; the used car loses 35-45% of its lower starting price.

Maintenance Trades Off

New cars have warranty cover (typically 3-5 years) and minimal repairs. Used cars are out of warranty, averaging 400-900/year in maintenance vs 150-350 for a new car under warranty. Over five years the gap narrows — the new car leaves warranty at year three and matches the used car's maintenance thereafter.

Where Used Usually Wins

Buying a 2-3 year old car off lease typically saves 30-40% of new price. Five-year total cost (depreciation + maintenance + similar fuel and insurance) is 20-30% lower than a new equivalent. Exceptions: very reliable brands (Toyota, Honda) where used premiums are small, and heavily-discounted new models with generous warranties.

A worked example

Try the defaults: new car price of 35,000, used car price of 22,000, new annual depreciation of 15, used annual depreciation of 10. The tool returns approx 8k. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to New Car Price, Used Car Price (2-3 yr old), New Annual Depreciation, Used Annual Depreciation, and New Annual Maintenance. Two inputs usually tip the answer one way or the other. Identify which ones matter most by flipping each value past a round threshold and watching whether the winning option changes.

The formula behind this

Depreciation cost equals price times (1 minus (1 minus rate) to the power of years). Maintenance cost equals annual maintenance times years. Total cost sums both. Results are estimates for illustration purposes only. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

When the result says "wait"

If the payback is longer than you expect to keep the item, the math says no. That's useful information — not everything has to earn its keep financially, but knowing when something doesn't means the decision to buy it anyway is deliberate.

What this doesn't capture

Purchase decisions rarely come down to payback alone. Reliability, time saved, enjoyment, and alternatives outside the calculation all matter. The figure gives you the money side cleanly so you can weigh it against everything else honestly.