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Used Car Bubble: Why "Young Used" Cars Are Often No Bargain

It used to be: Buy a one-year-old car = save 30%. Today the market has gone crazy. Why new cars with discounts are often cheaper.

For decades, grandfather's advice was correct: "Don't buy a new car! It loses value as soon as you drive off the lot. Get a one-year-old car." But since Corona, the chip crisis, and inflation, the car world has turned upside down. The old rule no longer applies unreservedly.

The Paradox: Used More Expensive Than New?

In recent years, I have seen phenomena that shouldn't exist. Used cars were partly traded above the list price of new cars. Why?Availability. Those who needed a car now had to take what was there – and pay a premium for it. New cars often had 12-18 months delivery time.

Discounts Are Back – For New Cars

While used car prices remain at a very high level ("sticky effect"), discount battles are back for new cars. 20% discount on the list price is not uncommon.

Calculation Example:

  • List Price New: €40,000
  • Street Price New (after 20% discount): €32,000
  • Price 2-Year-Old Used: €30,000

For only €2,000 extra, you get a brand new car with a full warranty, instead of an "old crate" with 30,000 km on the clock. The "used car advantage" has almost completely disappeared here.

The Interest Trap when Buying Used

This is where it gets really expensive: Financing.Manufacturers often massively subsidize new car leasing (rates from 0.99% to 3.99%) to push cars into the market. For a used car, you have to go to a normal bank. There you currently often pay 6% to 9% interest.

This can lead to the "cheaper" used car being more expensive in the monthly rate than the brand new car!

Watch Out for "Bargains"

Don't fall into the trap of the past. Just because a car is used doesn't automatically mean it's a "Smart Buy". Always compare:

  1. What does the new car really cost (incl. discount)?
  2. What interest rate do I get for New vs. Used?

Conclusion

The car market has turned. Blindly looking for used cars often costs money today instead of saving it. Compare offers for new cars (especially stock vehicles) carefully before deciding on a used one.

New or Used?

Calculate both scenarios.

About the Author

Hi, I'm Michael. I built Carculated because I was looking for an independent calculator that honestly compares total costs incl. opportunity costs – and couldn't find one. So I had to build it myself in Excel. Now this tool is available for you too.

Send me an email

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