Car Buying Tips: Is It Best to Buy New, Used, or Lease?

Getting a new car can be an intimidating process, from dealerships to financing – it can be tough to know where to start. We’re here for you each step of the way. To get you started, here we will introduce the 3 options: buying a new car vs. buying a used car vs. leasing a car.

Before looking at the options, take some time to think about your needs. What do you look for in a car? What types of features are important to you? How much are you willing to pay? Be sure to also think about the safety and reliability of your car.

Is it better to buy a new or used car?

There are pros and cons to buying a new car. Here are some of the best advantages:

• Reliability: It’s brand new. The probability of running into issues is obviously lower than getting a used car.
• Manufacturer’s warranty: Even if you did run into problems, you’ll have a warranty from the manufacturer. The maintenance costs will be much lower than a second-hand car.
• Customizability: You can rarely ask for a customized used car. If you need a certain feature customized, getting a new car might be best for you.

There are also some disadvantages:

• Expensive: Obviously, a new car costs more than a used car, but other than that, remember that insurance and registration costs will also be higher for a new car.
• Immediate depreciation: The depreciation of a car’s value is not linear. For a new car, you lose roughly 10% of its value the minute you drive off the lot. After the first year, it will probably be worth about 20% less than the original price. From years two to six, depreciation will be around 15% per year. In other words, it’s not a good investment if you might want to sell it in 1-2 years.

Tip: Always ask for the MSRP (Manufacturer's Suggested Retail Price) when shopping for a new car.

Buying a used car, on the other hand, costs much less and depreciates slower. There’s also a bigger room for negotiation. However, you should understand the risks:

• You may not know the history of the car.
• There’s no or limited warranty, which means higher maintenance costs.
• You may need to replace it sooner.

In general, getting a used car may save you some money, but you should spend more time on research to make sure you’re getting a reliable car at a reasonable price.

Tips for buying used cars

Worried that you’re paying too much for a second-hand car? Here are some fundamental tips for buying used cars:

• Use Yelp to check reviews of the dealers
• Get a CarFax vehicle history report, either from the dealer or online
• Ask for the VIN (Vehicle Identification Number) to see the vehicle history report
• Have an independent or family mechanic look at the vehicle
• Get a Mechanical Breakdown Protection

When is the best time to buy used cars?

Apart from mechanical aspects, it’s also smart to mind the timing if you don’t need to get the car right away. To get a better deal, try shopping for a used car at those times of the year:

• December / end of the year: As dealers are looking to meet their annual sales goals and get rid of the prior model-year cars, it’s more likely for you to get a larger discount.
• Veteran’s Day, Labor Day, and Black Friday weekends: Since holiday weekends are popular times for buying new cars, there are also tons of used cars getting traded in or returned.
• After new models have come out: Just like the price fluctuation of iPhone models, the prices of previous models often take a dip as many buyers switch to the latest model.

Read our auto buying guide to learn more about ways to avoid expensive mishaps.

Pros and cons of leasing a car

How about leasing a car? Is it a good idea to lease a car compared to buying one?

It depends on your needs and preferences. Some benefits of leasing a car include:

• You can drive a new car without having to worry about selling the old one. You can easily switch or upgrade your car after the lease ends.
• You may be able to get lower monthly payments compared to paying for a car loan.
• The upfront cost is also lower than buying a car.

There are some disadvantages that you also need to know:

• Since the vehicle does not belong to you, it is not your asset. You won’t be able to sell it after using it.
• Once you sign the contract, it’s hard to get out of contract. You may have to pay a high termination fee.
• If you decide to buy out after leasing, it often costs more in the long term than buying the car in the beginning.

Generally, leasing a car is suitable for those who want to change their cars every year or 2-3 years, as well as those who need a car for only a certain amount of time. It’s also worth noting that leasing usually has a mileage limit, which means it’s not a smart choice for those who need to commute for long distances or drive out of town frequently.

Ready to get yourself a new car?

If you’re not sure where to start, read our free auto-buying guide to help you better navigate your way to your next new car. It covers a lot more than this article.

If you’re thinking about car financing, learn about the four important steps to buying and financing your next new car. You can also make use of our auto loan pre-qualify tool to quickly check how much you may qualify for, without impacting your credit score.

If you want to learn more about Aquila Standard’s auto loans, check our current auto loan rates and use our auto loan calculator to estimate your loan amount and payments.