photo credit: Ian Fuller
My wife and I are in the market for a new family vehicle very soon. In the past, we have always preferred the option of a car lease for a variety of reasons. The lease on our current vehicle is set to expire in the next few weeks, so we need to get moving on finding something new. We basically have to make a choice between 3 options when finding our new vehicle – buying a new car, buying a used car, or leasing a new car. While I have had experience in my life leasing vehicles as well as buying a new one, neither my wife nor I have ever purchased a used vehicle. I have decided to break down our 3 options below to explain my personal experience in each category. Hopefully it will help to guide our decision making process in the next few weeks.
Buying New Car
I have purchased one new car in my lifetime. It is a Saturn SL1 and we bought it soon after September 11th when a lot of the auto dealers were offering 0% financing for 60 months. This type of vehicle is a good second car that I can drive to and from work or out for errands. I have had some parts that needed to be replaced on it, which was a little frustrating based on the very low mileage on the vehicle. Other than the parts, the car has been good to me and it is fully paid off! I try and keep good care of it and really enjoy the fact that I don’t have any monthly payments on it right now. I can see myself driving this car for another 5 – 6 years or until it totally dies.
I will only purchase a new vehicle if I can get 0% financing on it. I refuse to pay any interest on any new vehicle. With the current economic landscape, now is a great time to find good deals on automobiles. The economy is in a wreck and several of the domestic automakers are on the verge of bankruptcy. The buyer has the upper hand right now and if we decide to purchase a new vehicle, I will be sure to take full advantage of our situation.
Buying Used Car
I have never purchased a used vehicle in the past. I have several close friends and family who prefer this option. In fact, this option probably has the most value on your investment. The problem I have with purchasing a used vehicle is being able to understand the history of that vehicle. I know there are resources available now to help assist you in checking up on the vehicle history, but my lack of knowledge still concerns me on this. I also know first hand that even if you can find out about the history of the vehicle, there is still things that previous owners can do that can go unnoticed. For example, a close family member has become an expert on turning back the mileage on a vehicle. I have no idea how this is done, nor do I want to. But he has been able to drive unlimited miles on multiple leased vehicles without ever going over 12,000 miles per year. That fact alone scares me!
Basically, the only viable option for us to purchase a used vehicle right now is to buy the current leased vehicle we are driving. We have taken very good care of the vehicle, know the history, and have put less than 20,000 miles on it in 2 years. We like the vehicle a lot and would consider this as an option. My only fear is that we would need to get the financing (probably 60 months) and would not have the option of 0% interest rate that are being offered at dealerships for new vehicles. In addition, credit markets are tight right now. While we have good credit, it still is an unknown at this point. Then we have to consider that if we financed this vehicle for 60 months, it would be 7 years old by the time we paid it off. The current mileage on the vehicle is really good but 7 years worth of wear and tear scares me some.
Leasing New Car
I have leased 5 vehicles in my lifetime and have had good success. We don’t really drive a lot of miles so going over our allotted mileage has never really been a concern. The one problem with leasing though is that it is like renting an apartment. You don’t see any value for your money when you are done paying for it. Once your lease has expired, you turn in the vehicle and have nothing to show for it.
One of the downsides of leasing right now is that several of the domestic automakers are not really allowing buyers to lease anymore. We actually spoke with multiple Ford dealerships a few months ago about our options for leasing again. They were extremely hesitant with this option and actually told us it would not even be worth it anymore. Basically, they all told us that they have closed off leasing to new customers and are only allowing it from existing lessees. In addition, the leasing values are not as good as they once were so this option may not be feasible.
We have found that some of the foreign automakers are still promoting some leased vehicles so we may check them out. I would prefer to buy domestic as I have strong ties to the auto industry, but I also need to think about what is best for my family.
Final Thoughts
Regardless of the option we choose, now is an excellent time to buy a vehicle. The buyer has all the power on their side right now. Automakers are struggling to stay afloat and I am excited to see the opportunities available to us right now.
What are your experiences in purchasing or leasing vehicles? Have you had success or bad luck when buying used vehicles?
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My wife and I have both purchased new cars in the past. In the future, however, we will most likely only buy used cars. I absolutely refuse to buy an asset that I know for sure will go down in value. Hopefully our vehicles will last another 5 to 10 years and we will not have to make this decision anytime soon.
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Bought a 1993 Tempo on Craigslist for $800.
It was a decent deal because it had low mileage but I’ve had to spend over $1,000 bringing the maintenance up to date.
Otherwise, it runs great and I have no car payments.
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Dusty – The frugal me says to buy used. My wife says to buy new!
TStrump – I use to have a 1991 Tempo! I love not having car payments. We have a 2001 Saturn SL1. Not much special about it, except we don’t have any car payments!
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