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BUYER’S GUIDE: Should You Buy a New, Used, or Leased Car?

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Buying a car is a complex process with lots of factors to consider. In addition to deciding which car is perfect for you and your family and how much money you can afford to spend, you also have to figure out if you should buy new, used, or leased.

There are good reasons for each choice and it all depends on your individual circumstances so don’t assume that what a friend did when they bought their last car is automatically the only way to shop. Even the way you bought your last car years ago might not be the best choice for you today. Here are tips for deciding whether you should go new, used, or leased when you shop for your next car.

Reasons to Buy New

There is no denying the appeal of having a shiny, new car to call your own and it does come with nice benefits. Chief among the perks of owning a new car is that they include new car warranties. You won’t be shelling out cash for many repairs until you’ve had your car for a set number of months or driven it over a certain number of miles.

Some also feature a period of free roadside assistance and even routine maintenance. You can keep up with your oil changes and it won’t cost you a dime. Exactly what you get in a warranty varies depending on the automaker so be sure you know what is and isn’t included before you buy. A new car is a great option for someone who doesn’t want to worry about repairs and puts a priority on having a reliable vehicle in their driveway.

The predictable expenses of owning a new car are also appealing. Fears of your car breaking down are reduced, so you don’t need to worry as much about budgeting for surprises. A consistent financial outlay in the form of a monthly payment is peace of mind and a great reason to buy new.

The Downside to Buying New

There’s a little thing called depreciation and it hits you big time when you buy a new car. If you’re planning on keeping your new car for a long while, then this isn’t as big a deal. The problem comes when you unexpectedly need to sell and have a car that’s worth less than what you still owe on your loan.

You also have a potentially higher monthly payment, down payment, and insurance costs. It can be more expensive to get a new car in your driveway than choosing one that’s used or leasing and it can be more expensive on a monthly basis. The extra cash may be a dealbreaker for those on a tight budget.

Also, just because a car is new doesn’t mean it’s indestructible. You’ll still have to worry about wear and tear. A single nail can ruin that brand new set of tires. Make sure you still have the cash to handle unexpected repair costs.

Reasons to Buy Used

Those on a budget will find a used car much easier to afford than new. That dreaded new car depreciation happened when someone else owned the car so you don’t pay that price when it comes time to sell and you pay less to get the car into the first place.

The lower price for used cars means you may be able to get a more well-equipped car and still pay less money than you would for a new one with fewer features. A low mileage used car packed with features can be less than the base model of the same car purchased new. Luxury brands, in particular, can be quite a deal when you buy used rather than new.

Many people worry about potential repair costs when buying used, but there are used car warranties offered when you buy through dealerships. This takes away some of that fear and makes it easier to take the risk.

The Downside to Used Cars

It’s crucial that you know what you’re getting when you buy used. Do extra research to be sure the model you’re looking at does not have a history of problems that will hit you in the wallet in a few months.

This includes checking to see if it has been recalled and that the recall service was completed. Be particularly cautious if you’re buying from an individual rather than a dealership. They should have paperwork to back up their car’s service record.

An inspection by an independent mechanic is also advisable to ensure you’re not buying a car that has hidden damage. No matter how good it looks, you need to have someone who knows cars give it a good once over. Even if a seller has paperwork to show the car has been maintained and was recently serviced, you should have it checked by your own mechanic to make sure everything is in order.

Reasons to Lease

Leasing lets you get into a new car without worrying about that pesky depreciation. After a few years, you turn it in or can opt to buy out the lease and make the car yours for good. It’s a great option for those who prefer driving a new car, but don’t want to be bothered with owning one outright.

Leasing also requires less of a down payment and if it turns out you hate your leased car, then you’re only stuck with it in the short-term. Once that lease is over, you can opt for something else. Some people like to hold onto their cars for years, but if you like the idea of getting something new on a regular basis, then leasing is the way to go.

The Downside to Leasing

The big worry with leasing is going over the mileage cap. There are mileage limitations that will cost you if you drive too much. It’s essential that you be realistic when you figure out how much you drive.

Make sure you consider how you’re driving today and how you might be driving in the next few years. A job change that increases your commute could wreck your mileage estimates. It’s safer to overestimate rather than underestimate and end up owing thousands when the lease is over.

There are also fees if you return it in less than stellar shape. Some wear and tear is expected, but anything considered excessive will cost you when you turn in your car. Make sure you understand what is considered wear and tear and what is considered damage so you’re financially prepared when the lease expires. Just because it’s leased doesn’t mean you don’t have to take care of your car.

It’s also difficult to get out of a lease. If your circumstances suddenly change, then it’s going to be a challenge if you can’t afford that lease payment. Be sure you can live up to the loan term before you commit and don’t stretch yourself too thin.