Whether you’re buying your first car, upgrading the family car, or purchasing a car for a new teen driver in your family, it can be hard to know which route to take. Do you buy used, new, or lease?
There are benefits to all of the options for acquiring a new-to-you car, but our Bountiful car repair experts share why some pros significantly outweigh others.
Benefits of Buying a Used Car
Ideally, you can purchase a quality, used car without a loan. With just a few thousand dollars, you can immediately become the new owner of a reliable vehicle, avoiding car payments with interest. However, it’s not your only option.
Did you know you can buy a used car from a private seller with a loan? Or, you can go to a certified dealer and purchase previously owned vehicles. To be sure you’re getting a good deal, you can always make an appointment to bring your new-to-you vehicle to Master Muffler for a tune-up.
- Buying Used with a Loan
- Significant savings upfront compared to buying new.
- Room to negotiate on price.
- Certified sellers remove the risk of buying a “lemon” or an unreliable vehicle.
- Lower cost-per-use compared to leasing.
- Money saved buying used can be put toward improvements or customizations.
- If you need to sell the car, you can try to turn a profit and pay off any remaining loan balance, or put the equity toward another vehicle.
The Downside of Buying Used
In the years before 2020, buying a used car was a bit less complicated, therefore making it less expensive. You could find a deal on any number of makes/models. Now, with the shortage of supplies needed to manufacture new cars, there is increased demand for buying used because the new cars that are available have increased in average price.
Purchasing a used car from a private seller may come with risks. Undisclosed defects may not be apparent when you view and test drive the car, but those problems may become more obvious after prolonged use. However, there are no hidden fees when buying from a private listing, which may not be the case when buying from a dealer.
If you do find yourself in need of Bountiful car repair services, let us know how we can help.
Benefits of Buying New
Like buying used, you can pay cash for a new car and own it outright. You’ll just need tens of thousands of dollars in hand.
- Buying New with a Loan
- Long-term loans can make expensive cars more affordable.
- No penalty for paying off the principal early.
- If you sell the car before the loan is paid in full, you can use proceeds from the sale to pay off the balance of the loan.
Advantages to buying new include having a car fully equipped with the latest technology and amenities. New cars are being built better than ever, meaning they maintain their performance level longer, and have the potential for higher resale value. As a result, the cost-per-use goes down significantly as cars stand the test of time. When your car repair needs become frequent, it’s a sign you’ve finally gotten your money’s worth out of your new car.
The Downside of Buying new
Did you know the average cost of buying a new car in 2021 is $40,857? And that price tag is steadily growing as parts for manufacturing remain scarce.
As soon as you drive your brand-new car off the lot, it decreases from its retail value to its wholesale value. J.D. Power estimates you’re losing 25% of the car’s value as you leave the lot. Additionally, you can expect your new car to continue to lose 15%-20% of its value each year you drive it.
Benefits of Leasing
A lease payment is calculated based on the car’s current value, and its projected value at the end of the leasing period. Finance charges are tacked on to the monthly amount, but a lease payment is usually lower than a loan payment.
Another benefit of leasing is that you can regularly drive a new car, many of which are still under the manufacturer’s warranty, so some of your routine service maintenance may be covered during your lease.
Unlike when you purchase a vehicle, when you lease you’ll never have to worry about selling the car when you’re ready to upgrade; you’ll simply return the car at the end of your lease and move on. The car’s depreciated value does not affect your ability to lease another car.
Did you know business owners can enjoy tax benefits if they lease cars for their employees? Rather than purchasing a fleet of company cars, a business can lease and for less money upfront, and claim deductions on the taxes paid.
Downside of Leasing
It’s true that you can have a smaller monthly payment when you lease but, first, you have to qualify for it. You may need an exceptional credit score to even get approved for a lease.
Also, you’re never making payments towards owning the vehicle, and if you choose a long-term lease, you may end up paying more over the years than if you had taken out a loan for the car in the first place.
Many people don’t realize there are mileage limitations in lease agreements. Your monthly payment will increase by a specified amount if you go over the set mileage. Each month you’ll have to budget your miles to accommodate your work and personal needs.
Without a sense of ownership, while driving a leased vehicle, you may be less inclined to care for it. Be aware you’re responsible for damage to the car, inside and out, and will have to pay for repairs at the end of your lease agreement. This doesn’t pertain to normal wear but, rather, to body damage, or permanent marks left behind in the interior (thanks, kids and pets!).
Unlike with a car purchased with a loan, early lease termination will include fees. You can decide to sell and switch vehicles without being penalized, whereas when you own your car you’re free to do so.
The Breakdown of Financing a Car
Buying used or new outright with cash is the ideal situation for purchasing a car. No loan means no interest, which means you’ll pay less for the car in the long run. At Master Muffler Bountiful, we think the next best option is to buy used or new with a loan. You have the option of someday owning the car, which gives you more freedom to do with the car what you’d like. With regular visits to your favorite Bountiful car repair shop, you can have the car in your family for many happy years to come.