It’s safe to assume that anyone looking to save money on an expensive item should consider buying used. Savings on used clothing, furniture, appliances and similar goods can look like chump change when compared with buying a used car. But how much are people really saving when they buy one?

An analysis conducted by finder.com found that when using auto loans to purchase a used car, consumers may save only $500 in interest when compared with buying new. It turns out that buying new might actually stretch your dollar further in the long run as a result.

Assessing value

The average costs for cars can differ greatly between new and used: $36,400 for a new car and $19,232 for used on average. However, because lenders typically charge higher rates for used car loans, the interest you’ll pay to borrow either amount could be nearly the same. With the average auto loan rate for a new car at 4.74% (68-month loan term) and for a used car at 8.50% (63-month loan term), it’s easy to see how paying nearly twice the rate on a loan will end up costing you.

For example, an average used auto loan of $19,232 could end up costing $23,908 — that’s $4,676 in interest charges — while a new auto loan of $36,400 could end up costing $41,579 — or $5,179 in interest charges. The interest from the new car loan is only $502 more than the used care loan.

Other factors to consider include insurance rates and resale values. Although in many cases new cars have higher insurance rates, new cars may have lower if it has better security and safety features. If the used car is less than 5 years old, it may be hit similarly hard as a new car in terms of depreciation. Ultimately you can’t assume a used or new car will be a more financially sound decision without doing your research.

How often are Americans taking out car loans?

According to the Bureau of Economic Analysis, total vehicle sales were down by $1 million (seasonally adjusted) from February 2017 to March 2017, with sales for March 2017 at $16.9 million. Despite the decline, car sales have remained steady at $17 million to $19 million a month for the last two years, according to the Bureau of Economic Analysis.

Although total car sales have slowed in the past two years, auto loans are on the rise according to finder.com analysis of Center of Microeconomic Data. We estimate that total auto loans will collectively hit $1.26 trillion by the end of this year — which is higher than ever. This figure is based on the average quarterly growth rates over the past two years, culminating in the highest level ever recorded nearing the close of 2016: $1.157 trillion. This could mean that consumers are taking up loans to purchase cars when they’ve traditionally paid for vehicles in full.

Even when times are hard, cash-strapped people still need to get around.

Since people are buying less cars, the borrowed amount in auto loans is outpacing the number of auto loans suggesting that the size of the loans are increasing rather the number of them. The total auto loan debt balance is increasing by 8.74% from year to year compared to 5.96% for the total number of auto loans outstanding.

Over the past 10 years, the total balance for auto loans has risen by $336 billion (40.93%) to $1.157 trillion. Meanwhile, the total borrowed last year for auto loans fell by $13 billion (15%) — from $109 billion in 2015 to $93 billion in 2016.

That’s not the only thing dropping: The number of auto loans taken out in 2016 fell to 5.97 million accounts (from 7.55 million in 2015).

Luckily, based on average growth rate between Q1 2015 and Q4 2016, finder.com forecasts the average auto loan for new and used vehicles is expected to fall to $14,679 (from $17,886) by the end of 2017.

Tips for saving

If you can afford to purchase your car outright without a loan that is often the best option. However, comparing your savings over time is a good start when deciding between a new or used car. Getting insurance quotes and calculating depreciation costs over time can help determine whether to purchase the new car or used car of your choice.

If you’re more comfortable carrying a loan than parting with cash, mull over the down payment required for each vehicle. As the used car is likely to require a smaller loan, the initial payment will be less. However, as explained above, your interest rates will be higher resulting in greater fees for a used car.

According to finder.com Consumer Advocate Jennifer McDermott, “It’s a good idea to start with an online guide on auto loans like this one to help you understand these loans and find one that suits your needs.”