When you're in the market for your next vehicle, you have a few choices when it comes to paying for it. You can buy a new car, lease a new car, or buy a used car. Determining which is right for you depends on your budget, what you'll be using the vehicle for, whether you want a statement car that conveys status, or the need for a vehicle that's practical and utilitarian. You also need to factor in the climate where you'll be doing most of your driving, especially if you live around the ice belt. 

Buying a Used Car, Truck, or SUV

Image via Flickr by free pictures of money

Financing a used car has its advantages and disadvantages. You need to consider both when deciding to finance a used car. Advantages include:

  • Lower initial cost. Buying a used car can be significantly less expensive than purchasing a brand new vehicle. If you're purchasing a late-model used car, you may have most of the features you'd expect and desire from a new car.
  • Lower insurance premiums. If you have a decent driving history, and few-to-no accidents or tickets, your insurance costs will be lower than that of the insurance premiums for leased vehicles.
  • Less stress about appearance. Absolute perfection isn't as much of a concern. Your first dings and scratches won't hurt as much as if you'd bought or leased a new car in perfect condition. You also won't be risking penalties for any damage.
  • Less time spent paying it off. Eventually, you won't have payments anymore and will own your car outright. With a lower-cost used car, that time can arrive sooner than if you bought a new car with a higher price tag, which would have you paying a higher monthly cost for a longer period of time.
  • Years of usage. Most newer used cars can be street-worthy for at least 100,000 miles, and well-maintained used cars can often drive many more miles than that. If your car is a bit older or has higher miles at the time of purchase, you can inquire about extended warranties at your dealership.

You will also need to consider several disadvantages to financing a used vehicle, such as:

  • No customizations. You can't customize a car with options as you would in a new car. Your vehicle's features and color can't be chosen at the start, although you can opt to change the color of your vehicle with an aftermarket custom paint job.
  • Maintenance and repair costs. When you buy a used car, the responsibility of expensive maintenance and repairs fall to you. However, you can help mitigate the costs with an extended warranty. Also, the initial savings of buying a used car can help offset the costs of future maintenance and repairs, especially if you put aside some of the money you've saved on the vehicle's purchase at the time of purchase.

The advantages of buying a used car appear to outweigh the disadvantages, but does it make more sense to lease a used vehicle in the long run?

Leasing a Car, Truck, or SUV

When considering leasing a car, truck, SUV, or van, you'll want to consider the advantages:

  • Cost savings. You can acquire a new car for less than it would cost to buy the vehicle outright. Down payments on a lease tend to be lower than what may be required for buying a new vehicle. Sometimes you may also get a deal with no down payment required. 
  • New cars every few years. Leasing a car means that you can trade-in your lease for a newer spiffy-looking car or a shiny truck after a few years. If you get bored easily or simply just like the idea of getting a new vehicle every few years, leasing gives you the opportunity to change it up. 
  • Keep up appearances. You may work in sales, real estate, law, finance, or another profession that requires you to portray a particular image with the car or truck you choose to drive. In addition, if you're utilizing your vehicle for business, you can write off some of your lease as a business expense come tax time. 
  • Maintenance and repairs. Scheduled maintenance and repairs are included, and the responsibility falls to the dealership. The dealer you lease your car or truck from has a vested interest in keeping your vehicle well-maintained and cosmetically appealing, as they will be leasing the vehicle again or selling it as a certified pre-owned or used car later.
  • Depreciation doesn't matter. You won't have to be concerned with your vehicle's depreciating value. As you won't be trading it in or selling it, the depreciation concerns will fall to the dealership.

Take time to consider the disadvantages of leasing a used vehicle before making your decision. The disadvantages include:

  • Higher insurance. Your insurance rate will be higher due to incurring higher premiums because you're renting your leased vehicle from the dealership.
  • Payments don't apply to vehicle. Your payments don't go toward the ownership of your vehicle, so essentially, you're renting a car or truck for an extended time. Even though you're making monthly payments, you won't own your vehicle in the end.
  • Penalty fees. You can be charged penalties for excess miles above your lease contract's allowable yearly mileage. You may also incur penalties for any excess wear-and-tear or damage if it's significant enough for your dealership to assert that the car is not close enough to the condition it was in at the start of the lease.
  • No customization. You can't modify your leased vehicle in any way, as the car doesn't belong to you. Whatever features are present in the vehicle have to remain intact.

When you decide to take the plunge and start shopping for a used car or truck, consider these advantages and disadvantages to buying versus leasing. The financial team at Apple Your Auto Source would be happy to discuss your options and how they fit your particular needs to help you determine whether you should buy or lease. You can reach us at 855-828-2665 or complete our easy, secure online messaging contact form, and a team member will get back to you.

Categories: Finance