Buying a car is often the second most financially significant decision an individual or family makes besides their home.
For many, a car is more than just something of convenience and reliability; it’s an extension of you both personally and professionally. It’s important that your vehicle provides a sense of security, safety and luxury.
It’s not always the most enjoyable experience walking the car lot with salespeople while trying to figure out what’s in your best interest.
Online resources have really changed this experience, allowing you to be better informed before stepping foot on that showroom floor.
As a consumer you now have access to information where you can become an expert in the details about buying a car new, leasing your vehicle or purchasing one used.
You can know exactly what make and model suits you perfectly for your specific needs. Many reputable dealerships offer an online showroom of their current inventory so you can already be comfortable with your particular car, all you have to do is simply schedule a test drive.
We’ll go over a few key differences between each buying decision to help you gain more knowledge and become comfortable. Above all, the most important aspect is for you to feel confident and avoid any stressful negotiation process during the buying decision.
Buying Your Car New
Many purchase a new vehicle because of the peace of mind that comes with a brand new car under factory warranty, avoiding many expensive repair costs.
Consumers also want access to the latest in technology, luxury and safety. While this is huge benefit of buying new, many financial advisors stress that it’s important to understand the depreciation a new vehicle will experience as well.
Convenience from being under factory warranty
Low risk of high repair costs
Current model’s technology and safety designs
Excitement of first time ownership
First year depreciation typically around 11%
15 25% annual depreciation rate
Some repair costs are not covered under warranty
Leasing Your Vehicle
Many people enjoy being the first time buyer of a current year vehicle, but prefer lower monthly payments. Leasing allows for this option.
This offers the opportunity of lower monthly costs than outright ownership with the same satisfaction of being under factory warranty.
The downside though can be expensive fees for people that use their car outside the guidelines of their lease agreement.
Discounted monthly payment for brand new car
Low down payment
Still under factory warranty from manufacturer
Access to the most current brand technology and luxury
Complicated leasing structure, important to understand residual value
High fees when you use your vehicle outside of the lease agreement
Purchasing the remainder of the vehicle can be more expensive than market price
Purchasing Your Car Used
The used car market allows for someone to find many valuable deals if they are willing to put in some due diligence.
The value in the used market also allows for many to enter into a higher luxury brand that would be less affordable with a new vehicle.
For some interested in say Mercedes-Benz, they have the accessibility of the technological safety innovations made by Mercedes at a discounted price, versus purchasing a new vehicle from a lower tier brand with these same features not included.
While many people hesitate with used car purchases because of a fear of expensive repairs they do not understand, any reputable and trustworthy dealer will allow you to have an independent pre-purchase inspection to ensure you the quality of your car.
Financial value by purchasing after significant depreciation
Ability to enter a high-end luxury market at a discount
Access to better safety standards from luxury manufacturers
Some people uncomfortable with purchasing a used product
Must get a warranty from the seller that you do not pay for, typically for 30 days or more to ensure the dealer has thoroughly inspected it
Must check online reviews like Yelp
Do not purchase a car with deferred maintenance and repairs.
No matter your preference, it’s important to have a clear understanding of what you’re looking for and what you want before entering into any car negotiation. This allows you to come out as a highly satisfied consumer happy with your car purchase.