Car Shoppers: Should You Buy New, Used, or Lease?
So, you’re ready for your next car, but feel overwhelmed by the choices of buying new, buying used, or leasing. The best option for your financial situation will come down to how you like to use your car and what kind of car you’re interested in.
For example, some people like to upgrade their car every few years to get the newest models and features. Others like to buy and drive the car for as long as possible, with no plans to go car shopping again soon.
Keep reading for the breakdown on when it makes sense to buy new, buy used, or lease a car. Our car affordability calculators can help you explore all your options.
Buying a new car
Buying a new car could make sense for you if you like to have the latest tech and features. New cars come with the highest price of all three options, so it’s important to balance cost with your preferences.
Advantages of buying a new car
- You can order the exact make, model, and features that are most important to you
- You’re covered by strong consumer protection laws and new car warranties
- Reliability is highest with brand-new vehicles
- Most repairs and parts are covered by your warranty
Drawbacks of buying a new car
- New cars are expensive
- New cars require high insurance coverage and costly registration fees
- New cars lose value almost immediately after purchase
Buying a used car
When you buy used, you’ll have a lot of options. You could buy a slightly used car, or go back several years to get something more luxurious that’s on budget. With so many options at your fingertips, you’ll need time to do your research and have patience to find the car that fits your wish list and budget.
Advantages of buying a used car
- You might be able to buy a used car outright with savings, bypassing the need for a loan
- You’ll pay less than you would for a new car – and lose less to depreciation
- You’ll build equity as you pay it off
Drawbacks of buying a used car
- Buyers must research the Carfax report to understand the car’s history
- Reliability depends on how well the previous owner maintained the car
- Warranty coverage varies by dealership and seller
- Maintenance costs typically increase as the car ages
Leasing a Car
If you have strong credit and you like the benefits that come with having a new car, you might consider leasing. While you won’t be building equity, you’ll likely have a lower monthly payment than with a new car loan, and you may be able to get a luxury model at a more attainable price than buying new. For some, this can be a nice alternative to buying new.
Advantages of leasing
- Lower monthly payments than financing a purchase
- Minimal upfront costs and down payments
- Short-term commitment allows swapping into a new car every few years
- Strong warranty coverage on most leased vehicles
- Access to higher-end models for less than the cost of buying
- No concerns about resale or trade-in value
Drawbacks of leasing
- The car belongs to the leasing company
- Lease contracts are expensive and complicated to break
- Insurance costs are typically higher for leased vehicles
- Good credit is required to qualify
- Leased cars come with mileage limitations (often 10,000 to 15,000 per year)
- Additional charges apply for excess mileage or damage beyond normal wear and tear
From a smart financial perspective, buying and keeping a car long term (whether it’s new or used) usually wins out. You build equity, avoid constant payments, and spread the cost over more years. But if you love the idea of driving a fresh car every few years and don’t mind always making payments, leasing could be a smarter choice.
In the end, your decision comes down to the kind of car you’re looking for, how you drive, how long you keep your cars, and your short and long-term financial goals.
Remember to check out our calculators to help you estimate your costs for buying or leasing a car.
