The Pros and Cons of Buying Used or Leasing a Car

 

Should you buy a used car or lease a new one? This is a great question that a lot of people struggle with when they need a vehicle. There are some great lease deals out there, but there are also some great used cars! There are pros and cons to each, so let’s explore them.

Leasing

When you lease a car, you’re paying to use the car, but—unlike with a car loan—you’re not paying any principle on it. The payments are therefore usually cheaper than with car loans, and most leases expire after three or four years, at which time you can trade in the car for another, newer model on similar terms. Here’s what you need to know.

Pros of Leasing

  • Care-free driving You drive the car during the years it is most likely to have no problems. Before it has time to develop that funny noise or smell, you’re ready to trade it in.
  • Maintenance-free driving Most of the time, you’re going to be leasing the latest model car and the oil changes and maintenance will come free with your lease. You hardly have to think about it.
  • Value security When you buy a car, you constantly have to be concerned with the trade-in or sale value. That’s not an issue when you lease.
  • Lower taxes Especially if you’re a business owner, you’re likely going to have significantly lower taxes through a lease than when you buy.
  • Move up in the world If you’re leasing, the lower payments often mean you can afford a better model car than you could ever afford to buy.

Cons of Leasing

  • Greater total expense In the end, you’ll probably be paying more at the end of your lease than you would have with a car loan.
  • Upkeep is a pain This is especially true if you have kids. The vehicle has to be returned in good condition, and you’ll pay extra charges if you turn it back in with marker on the inner doors or dog hair between the seats.
  • Payments never end If you get a lease, eventually you own that car outright. As long as you keep leasing, the payments never end.
  • Mileage limits Leases always come with limits, and if you go over those limits you’ll pay between 10 cents and 50 cents a mile for it.
  • No way out It’s very hard to get out of a lease without paying thousands in fees and penalties.

Pros of Buying Used

  • Lower initial cost You can get a car outright for a lot cheaper than you could buy a new car. You might even be able to buy the car outright where you would otherwise be forced to get a loan or lease and pay regularly on it.
  • Lower insurance You’re usually going to have significantly lower premiums on a used car in good condition than on any new cars.

Cons of Buying Used

  • Beware the lemon When you’re buying second-hand, it’s always easier to get stuck with a lemon than if you lease from a dealer.
  • No warranties Depending on where you buy, you might not be able to get any service programs for the vehicle or any warranty (though that won’t be the case if you buy used from a good car dealer.)
  • High interest If you do have to get financing to afford the car, you’ll likely pay higher interest rates than with a new car.

In the end, both leasing and buying a used car can be a good option, depending on your needs and situation. The key is to carefully assess your financial situation to understand where you really are and what your financial situation truly is. Then investigate your options at a local dealer near you. With a little work, you’re sure to find a deal on a great car that you can afford.

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