Why used APRs run higher (and why it rarely flips the answer)
Lenders price used loans 1–3 points above new: collateral values are less predictable and losses run higher. Promotional 0–2.9% new-car offers widen the gap further — but a rate applies to a principal, and the used car's smaller principal usually dominates. Run both versions of your actual deal in the auto loan calculator; the interest-column difference is usually smaller than one year of the new car's depreciation.
Depreciation: the cost that isn't on the loan
A typical new car sheds ~20% of value in year one and ~45–50% by year five — on $38,000, roughly $17,100 gone by year five, dwarfing every financing number above. Buying at year 2–4 lets the first owner eat that curve. The counterweights are real but smaller: full warranty, current safety tech, known history, and sometimes subsidized financing. That's the actual trade — curve-eating versus warranty-and-rate.
Decision rules that survive the showroom
- Budget-first: set the payment ceiling before shopping (car affordability calculator), then see which cars fit — not the reverse.
- 0% APR vs rebate: promo rates usually replace cash rebates; compare "rebate + credit-union rate" against "0% + full price" both ways in the calculator.
- Watch the term trap on used: 72–84 months on an aging car means paying on it long after warranties and patience expire (term math).
- Certified pre-owned prices between the two — worth it mainly for the warranty if you'd otherwise buy an extended one.
The total-cost sentence
Over five years, the used deal above saves roughly $12,073 in payments and avoids the worst depreciation — call it five figures — in exchange for older tech and shorter warranty. If that trade sounds bad to you, buy new with open eyes; if it sounds obvious, the used market is where your math already lives.