Mar 24 2009
Should I buy new or used car?
If you look at the new car prices you will see that all the manufacturers are giving steep discounts. Unless you are paying cash or like to keep your cars forever, you should seriously consider a new car. Why?
Payments are the answer. If you compare the finance payments of a slightly used car with the lease payments of a new car you will find that many times they are very similar. So you say “Yeh but if I lease I don’t own my car!” Consider the fact that most people trade their cars every 3 years. So in reality they never owned their car either since most finance for 48-60-72 months. The bank owns the car until that last payment is made. What about trade equity you say? Forget trade equity. When was the last time you traded in a car within the first 3 years or so and actually had equity? Not likely unless you put a considerable amount of money down. Cars depreciate faster than you can pay for them.
The next objection is usually “Yeh but I have nothing at the end of the lease.” Remember, you only paid for the depreciation and interest. That is why your payments are similar on the new car lease as they are on the pre-owned. If you were to do a proper comparison, you wouldn’t compare your 36 month lease payment with a 60 or 72 month finance. Most of the time if you do compare them with the terms being equal, your lease payment would be half of the finance payment.
Do the math and compare apples to apples and you will see that leasing a new car may be the right way for you to go. If it’s all about payments and you trade every 3-4-5 years, you should really consider a lease. Have a look at my Hub page for more information on “How to buy a new or used car“.
