Paul from Ohio is heading back to the office and facing a decision that millions of commuters are wrestling with right now: he will add 10,000 miles per year to his driving for the next five years, totaling 50,000 extra miles. His question to consumer finance expert Clark Howard was simple: is now the time to buy new or to purchase a one-year-old used car?
Howard’s answer flipped the conventional wisdom most people grew up with. “It used to be that I talked about the advantage of buying 1- and 2-year-old used cars because of particularities that are pretty involved. They’re no longer a deal generally compared to a new one,” Howard said. His bottom line for Paul’s exact choice: “If you’re asking me brand new, 1-year-old, I’d go brand new.”
Howard is right, and the math behind it has shifted in a way most buyers haven’t caught up to yet.
Why the One-Year-Old Sweet Spot Disappeared
For decades, the smart-buyer playbook was to let someone else absorb the first-year depreciation hit and swoop in on a lightly used vehicle at a discount. New cars typically lose about 20% of their value in the first year of ownership, which on an average-priced vehicle is a real number. The problem is that used car prices have not fallen proportionally to reflect that depreciation.
Buyers paid an average of about $47,100 for a new vehicle in December 2025, compared with roughly $29,600 for a used vehicle, according to J.D. Power retail transaction data. That gap sounds compelling until you factor in what you are actually giving up. A one-year-old vehicle is not the deal it once was relative to new, because used car prices remain elevated from supply chain disruptions that pushed buyers into the used market in prior years.
Howard’s key insight is about the depreciation curve itself. “You have to go significantly older in a vehicle and more miles before you’ve got a real benefit from the depreciation curve in a vehicle that will potentially have more ongoing maintenance problems and repairs, but will cost you effectively much less to own and operate. You got to look now 4 years out, even as far as 5 years out,” he explained. The math only works at the extremes: buy new and capture the warranty and financing advantages, or go four to five years old and capture genuine depreciation savings. The middle ground is where buyers overpay.
The Total Cost Calculation for Paul’s Situation
Paul’s scenario has a specific wrinkle that makes the new-car case stronger: high planned mileage spread over five years. When you put 50,000 miles on a vehicle over five years of commuting, every year of warranty coverage has real dollar value.
New cars typically come with a 3-year/36,000-mile bumper-to-bumper warranty and a 5-year/60,000-mile powertrain warranty. A one-year-old car with 12,000 miles already on it enters Paul’s ownership with two years of bumper-to-bumper coverage remaining. By year three of heavy commuting, that coverage is gone. On a new car, he would still be under the powertrain warranty for his entire five-year commuting window.
Financing costs add another layer that most buyers overlook. New-car loans carry significantly lower interest rates than used-car loans — a gap wide enough that the used car’s lower sticker price can evaporate over a five-year loan term. For Paul, who is financing either way, this rate difference meaningfully narrows the real-world cost advantage of the one-year-old vehicle.
Fuel costs matter too. WTI crude oil is currently around $95 per barrel, meaningfully higher than recent months. At elevated gas prices, efficiency differences between a newer model and a one-year-old version of the same vehicle class translate into real annual savings when you are driving 10,000 additional miles per year.
Who Should Still Consider Going Older
Howard’s advice fits Paul’s situation well, but it does not apply universally. The calculus changes for a buyer who can pay cash for a four- or five-year-old vehicle with 50,000 to 60,000 miles, avoiding financing costs entirely. Cars five years old or older typically incur around $800 to $1,000 per year in maintenance and repair costs on average, according to Consumer Reports, but that figure can still be lower than the total interest paid on a financed newer vehicle.
A buyer planning to drive for 10 or more years also has a different equation. The first-year depreciation hit on a new car gets spread across a decade of ownership, making it nearly irrelevant. That buyer benefits from the warranty, the lower financing rate, and a clean maintenance history.
Where the one-year-old used car genuinely fails Paul is the combination of high used-car financing rates, compressed depreciation savings at the one-year mark, and the loss of meaningful warranty coverage during his highest-mileage years. These three factors stack against the middle-market used car in his specific scenario.
One More Factor: The Affordability Window
Howard pointed out that “passenger cars cost a fraction often what any kind of SUV kind of thing is,” and directed listeners to a list of 10 vehicles under $30,000. The new-car advantage is most pronounced when you are not stretching your budget. A new sedan financed at a competitive new-car rate with full warranty coverage is a genuinely different proposition than a higher-priced new SUV. And keeping the purchase in a modest price range preserves flexibility for the fuel and maintenance costs that come with 10,000 extra miles per year.
The national personal savings rate has declined from 5.2% in early 2025 to 4% by the end of the year, meaning household financial cushions are thinner than they were. Keeping the vehicle purchase in the sub-$30,000 range preserves flexibility for the fuel and maintenance costs that come with 10,000 extra miles per year.
For Paul’s situation, Howard’s verdict is well-supported: buy new, stay in a passenger car rather than an SUV to control costs, and let the warranty absorb the risk of heavy commuting miles. The one-year-old used car at current market prices offers a smaller discount than buyers expect, higher financing costs, and reduced warranty protection precisely when Paul needs it most.
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