There comes a moment in everyoneâ€™s life when it is time for them to make one a big financial decision:â€”buying a car. Once you decide what type of car you need, it is now time to wade through the decision to lease a car, purchase a new vehicle or purchase a used car. All three choices have their clear benefits and drawbacks. Before you choose a direction and sign the papers, here is a guide from the Specialists at AIS outlining the pros and cons of each option:
Leasing a Car- The Pros:
â— Monthly payments and the initial down payment are generally much less to lease a car than buying a car.
â— You can get a car with less maintenance expenses, as most new cars come with a 3-yearÂ warranty, which is the typical period for a car lease.
â— Leasing a car allows you to always have the latest model and upgrades, if you will be upgrading to a newer model when your lease ends.
Leasing a Carâ€“ The Cons:
â— Credit requirements are usually stricter for leasing cars than buying them.
â— Your lease contract will limit the number of miles you can drive each year. If you drive over the accepted mileage, you will be charged a per-mile fee for every mile you drive over the limit when you turn in the car, and these charges can be very high.
â— You cannot make any major alterations to the car, and you have to keep it in good condition. If the car is not in as good or better condition when you return it than it was when you leased it, you will be charged repair costs.
â— Car insurance can be higher on leased cars Because many leasing companies have required coverage amounts
â— Unless you buy the car at the end of the lease term, you will never own the car outright, and will always have a monthly car payment if you continue to lease year after year.
Buying a New Carâ€“ The Pros:
â— If youâ€™re planning to get a car for the long haul and want to keep it until it falls apart, then buying a new car definitely your best option. Your loan on the new car will eventually be paid off, leaving you with a paid-for vehicle, no monthly payment, and the opportunity to save money by keeping it in good driving condition for years, or even decades, to come.
â— Since you arenâ€™t just renting it from someone else, there are no mileage restrictions and you can alter the car in any way you like.
Buying a New Carâ€“ The Cons:
â— If you plan on trading the car in to get another one when you can afford a nicer vehicle, it can be difficult to predict what the carâ€™s resale or trade-in value will be a few years down the road. You may not get as much back for it as you thought you would.
â— In order to get affordable payments, you may need to make a large down payment. If you donâ€™t have a trade-in, this may deplete your cash reserves. Monthly payments can also be large, and if you need to get them smaller, you will need to stretch out the length of the loan, which means it will be longer until the car is paid off.
Buying a Used Carâ€“ The Pros:
– Sometimes, a used car can be just-like-new, but with a cheaper price tag through the proliferation of certified pre-owned programs. The idea started with luxury brands such as Lexus and Mercedes-Benz and has become a popular alternative for car buyers.
– Although used vehicles typically don’t carry the same warranties as new ones, the original factory warranty on a new car is often transferable to a second owner. Buyers of certified pre-owned cars from an authorized dealer can purchase a late-model used car and get the balance of the original warranty. Another great option is Mechanical Breakdown Insurance (link to AIS MB page), which is like a dealerâ€™s extended warranty but often more affordable.
Buying a Used Carâ€“ The Cons:
– If you are thinking about taking a loan to purchase a used car, the interest rate is something to keep in mind. With financing incentives, loans on a new car typically come with lower interest rates when compared to a used car.
– The primary drawback of purchasing a used vehicle is uncertainty. Before you sign the papers, you can have a car independently inspected. However, it is often difficult to identify the effects of wear and tear that could lead to problems shortly after you buy. With a used car, you can expect to deal with more wear and repair needs than you do soon after a new car purchase.
While choosing the type of car to purchase can be difficult, we can make choosing the right insurance easy. The AIS Insurance Specialists provides competitive quotes from multiple auto insurance companies instantly. AIS customers save an average of $600 per year, so call us today! (888) 772-4247
The information in this article was obtained from various sources. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.