New, used or lease – what’s the difference?

You know how many people are looking to buy a car in America? A lot. According to NADA there were 1.2 million automobile sales in October. That’s 10.5% more than last year. Before buying, there are a lot of questions to be answered.

New Used Leased with Border

We’ve already tried to help with posts about what to know before you call the dealer, how to find a mechanic to inspect a car or how to be an expert car shopper without trying. Here are some other questions you might ask yourself now that you are in the market for a new or used vehicle along with a few pointers to help you understand things a little more clearly.

Should I lease or buy a car?

Leasing typically allows folks to drive nicer cars than they could afford to buy. The perks to leasing versus buying include lower down payments, less expensive monthly payments, and low maintenance costs because these new cars are covered under a factory warranty. The downside is that you will always have a payment with a lease, insurance rates are typically higher and if your leased car requires a down payment, you will incur that every time your lease expires.

New car versus used car?

The thrill of buying a new car can be intoxicating. You can pick accessories, you get a complete factory warranty, but you pay full price. If you can get past the desire for that “new car smell,” you may find that the best deal is actually a late-model certified pre owned (CPO) car for a savings of almost 40%. Fun fact, Volkswagen used to call their CPO program “Certified PreLoved.”

VW Certified Pre Loved Logo

CPO programs offered today are backed with a manufacturer warranty once they pass a series of rigorous inspections. CPO vehicles are a smart choice for budget conscious folks who are looking for a nice car with dependability and lower payments. Learn more about CPO cars here. If you can’t afford a CPO car, but still want a warranty there are many companies out there like Carchex which will provide coverage.

What if I have bad credit?

You don’t have to be rich or have a perfect credit report to buy a car even though it certainly helps. There are options for buyers with bad credit like “buy-here, pay-here” dealers. These dealerships help buyers with bad credit get used cars, but the interest rates can sometimes be very, very high. The dealer can also repossess the car if a payment is missed.

used car dealer buy here pay here sign

Are there other vehicle expenses?

The price of your new or used car is a lot more than the advertised price. You have to consider maintenance costs, gas prices, insurance coverage and more. Take a look at this example comparing the long-term costs of an F150, Camry and Accord. In addition to a monthly payment if you finance, your insurance coverage cost will increase since full coverage is required for a financed car.

Getting a new car or a “new” used car is an exciting adventure, but you need to seriously consider all of the other expenses that will put a dent in your budget to ensure you can happily cruise along in your new ride.

Photo sources: Ganley Westside VW