It’s a new year, but car buyers are still facing some of the same challenges. In 2024, the dilemma of choosing between a new or used car is influenced by several factors, including depreciation rates, interest rates, price trends, and the lingering effects of the pandemic. Let’s break down what you need to know to make the best decision in 2024.

Key Takeaways:

• For most buyers in 2024, new car deals are more sensible due to lower financing costs and attractive incentives.
• Used car prices are declining but remain high, affected by the pandemic’s long-term impact on production.
• New cars offer appealing financial advantages with low APR offers and manufacturer incentives, despite their higher initial cost.
• The choice between new and used cars depends on individual financial situations and long-term vehicle ownership plans.
• Free resources are available to guide money-conscious drivers through car buying decisions.

The automotive landscape has seen dramatic shifts in trade-in and resale values over the past few years. In 2024, a trend that began last year is continuing: used car prices are declining in wholesale markets, impacting trade-in values significantly. The era of purchasing a new car and flipping it for profit is over. Instead, we’re returning to the traditional pattern where new cars lose a substantial portion of their value as soon as they leave the dealership.

Interest Rates Matter – New Cars Have Much Lower APRs

This year, expect to see an uptick in subvented rates from captive lenders, as new car sales decelerate. Low APR offers are here to stay in 2024. Manufacturers are increasingly offering incentives to clear inventory, including surprising zero percent financing deals available in January. Despite stable interest rates, the high cost of loans remains a critical factor in the car market. Consequently, we anticipate a larger share of new car loans will be sourced through captive lenders like Hyundai Motor Finance, Ford Credit, and Toyota Financial Services.

Towards the end of 2023, data from Cox Automotive showed an uptick in 0% APR offers. We expect this trend to continue into 2024.