If you’re shopping for a new car on a budget, you might be considering a used car or lease. Used cars and leases are generally less expensive than buying a new car.
Before making the decision to lease or buy a used car, there are several factors to take into consideration. Let us look at the advantages and disadvantages of taking a car lease and buying a used car.
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Benefits of buying a used car
Buying a used car is a great option for many drivers, especially if you’re looking for a good deal. Here are some reasons why you may want to consider buying a pre-owned vehicle.
- Low out-of-pocket expenses. Used cars depreciate less than new cars, so your upfront costs are often lower than when buying a new car. Depending on how old the vehicle is, you may still get some of the features and benefits of the newer model.
- The flaws are not that bothersome. It’s normal for a used car to have some dings or dents, so you don’t need to stress so much about that first scratch.
- You can pay less for car insurance. Depending on factors such as your location, driving record, age and claims history, your insurance costs are often lower when you insure a used car.
Disadvantages of buying a used car
While there are many advantages to buying a used car, there are also some disadvantages. These are some of the disadvantages of going with a used car.
- You can’t customize a used car. When you buy a new car, you can choose the features you want, such as interior and exterior colors, sound system, and whether it has a sunroof. Older cars come as is, and there are fewer opportunities to modify or upgrade.
- Maintenance and repair costs are your responsibility. Car maintenance is important, especially if you want the car to last a long time. New cars usually come with a manufacturer’s warranty, which you don’t get if you buy a used car. You’ll be paying for repairs and maintenance out of your pocket, unless you buy one. extended warranty from the dealer.
Benefits of Leasing a Car
Leasing a car allows you to drive a new vehicle every few years. It’s a good option if you want a car with the latest features and technology, without all the commitment and high cost of ownership. Here are some good reasons to consider leasing a car.
- Enjoy the many advantages of a new car. Leasing gives you the benefits of owning a new car like new technology and warranty at a much lower cost than buying a new car.
- Your cost is low. When you lease, your initial out-of-pocket expenses, as well as your monthly payments, are much lower than when you buy a new car. Some leases don’t even require a down payment.
- Don’t worry about depreciation. When you lease a vehicle, you don’t have to deal with depreciation or loss of value. Simply return the car at the end of the lease term and the dealer takes responsibility for any depreciation.
- Simplify your taxes. If you rent a vehicle for business purposes, you can usually deduct gas and mileage on your taxes.
- You can have a new car every few years. After your lease expires, you can turn in the vehicle and take out a new lease. You can enjoy a new car every few years without having to commit to ownership.
Disadvantages of Leasing a Car
Many drivers choose to lease, but this is not the right option for everyone. Here are some of the downsides of leasing a car that you should be aware of before opting for this option.
- You always have payments. When you lease a vehicle perpetually, you always have to make monthly payments, and you will never own the vehicle (unless you buy it at the end of the lease term).
- You will pay more for car insurance. You may pay higher car insurance premiums when you lease a vehicle. Plus, lenders often require lessees to carry full coverage car insurance, which is more expensive than minimum coverage.
- You may be penalized for extra miles. When you lease a car, you must return the car under a certain mileage. If you go over those miles, you often have to pay a penalty fee.
- You can be fined for wear and tear. If you return a leased vehicle with dings, scratches, or stained upholstery, you could face penalty fees if the leasing company finds the car to be in worse condition than when it was first leased. Was returned in bad shape.
- You cannot make any changes to the vehicle. Because you are basically leasing the vehicle, you cannot make any changes or modifications to the lease.
Finance & Insurance Editor
Elizabeth Rivelli is a freelance writer with over three years of experience covering personal finance and insurance. He has extensive knowledge of various insurance lines including car insurance and property insurance. His byline has appeared in dozens of online finance publications such as The Balance, Investopedia, Review.com, Forbes and Bankrate.