PrettyGirls on Wheels: Should You Buy or Lease?
Living in the suburbs, where even a trip to the “corner store” means jumping into the driver’s seat, it’s hard to imagine my days living at Yonge & College in Toronto and relying on trains and streetcars to get around. When it came time to move out of the city and invest in a car, I can remember being conflicted as to what the right move was. Should I buy new? Should I buy used? Should I lease? My only frames of reference for either of those answers were my dad’s insistence of buying new as a fiscal fail, and a particularly wealthy employer who only ever leased her cars.
In researching which method was, in fact, the right method, I came to the conclusion that each has its advantages and disadvantages. There are plenty of things to consider, not the least of which will be your lifestyle and your finances, when you’re ready to start the oh so fabulous task of car shopping!
Buying a New Car
One surprising pro I found for buying a vehicle brand new, off the lot, is that a lot of dealerships now offer fixed car prices, removing what is to many people the anxiety-inducing practice of price-haggling. No negotiating necessary!
If you’re like me, and don’t mind (maybe even relish?) the opportunity to flex your bargaining muscles, research prices online before you go, so that you’re fully armed with the fair market values of the cars you like.
While it’s true, as my father so often and so eloquently reminds me, that a new car loses value the moment you drive it off the lot, a shiny new car is also less likely to have any major mechanical malfunctions for a few years, and if it does, you’re likely covered via a standard warranty.
Financially, a new car may set you back a little more in initial costs as they’ll typically require larger down payments. Your monthly payments for the car will also be higher than they would be if you’d leased the same vehicle, but once the car is paid off, your monthly payments are over, meaning in the end, buying is usually cheaper than leasing if you plan to keep your car for many years. When you do decide to move onto something newer, however, you’ll be left with the task of selling it or trading it in yourself.
Buying a Used Car
The main reason I’ve always leaned towards used or leased cars is because it’s always cheaper than buying the exact same make and model vehicle brand new. Other expenses of car ownership, like car insurance and registering your vehicle, are also lower, because those costs are based on the current valuation of the car.
That being said, it’s important to note that the maintenance and repair costs on a used vehicle will likely be higher, since older cars can start to show their age. You can mitigate the risk of any surprise initial problems by researching the car’s history yourself. Used car purchases are typically as-is, so if you’re not getting a warranty from a dealer, you can purchase a vehicle history report online for less than $100. Pay attention to things like the odometer reading when comparing one used car to another, ad always bring it to a mechanic you trust for an inspection before closing the deal.
Leasing a Car
Leasing a car has the financial benefit of monthly payments that are often significantly lower than if you’d purchased or financed a new car. Depending on the length of your lease, often anywhere from 1-3 years, you just sign a new lease and drive a new car. My preference for leasing vehicles is the balance between saving costs and not losing equity in a vehicle from the first drive, but still being able to access the latest and newest technologies and the most advanced safety features on the market.
On the flip side, no matter how much you love your leased vehicle, it’s not yours, and will need to be turned back in at the end of the lease, although most dealers now offer the option to buy your leased car from them. Since it’s not yours, however, your car ill always be under warranty, so you’ll have lower repair costs, and your lease is up, you won’t have to deal with selling the car. You will have to limit your driving, since there are strict mileage restrictions and overage fees should you go over your agreed upon limit. And if you have to terminate your lease early, it can be very expensive, so it’s important to ensure you can commit to the contract you’re signing.
In the end, it really comes down to choosing the vehicle, and the purchasing option, that is best suited to your lifestyle and your finances. Do whatever makes you (and your bank account) happy!