Does it Make More Sense to Buy a Used Car or Lease a Brand New Car?

Even though a brand new car boasts unparalleled reliability

, plenty of people can only afford to lease them. And lease payments seem somewhat low as compared with buying one, roughly the same as the amount for a used car. Even though it appears like a safe choice, is leasing better than buying a used car? Why don't we look at the amounts to see how it works out in the end.

I got my car in the the summer months of '07 (exactly at the top of the market-terrible timing for large products) and chose smartly, a Toyota Corolla (in spite of recalls). While it has been dependable, and I've replaced the common parts - windshield wipers/air filters/belts etc...as well as had it serviced at the dealership for any necessary oil changes. I have paid nothing more than what you should imagine as being a vehicle owner. The car costs me $320 monthly, meaning that during the 48 month lease term I'll have put out $15,360. Let us expect about another $1,500 for repairs covering the 4 years to obtain a total of $17k. The amount to own it after the lease it up is approximately $10 grand.

Contrast that against a used auto stated at $4000. As with any kind of debt, I'd desire to repay it without delay to lessen the quantity of interest fees paid out. Should we assume the most difficult scenario - that my credit history was horrible - I'd have to pay a 25% interest rate. Over the course of a 2 year time period, I'd end up forking over $213.63 per month, to find a complete dollar sum of $5119.92. Of course I am not going to expect that it was a flawless car, so we will also suppose that it needed $3,000 to fix parts that failed during the loan period. Keeping the routine service figures alike we end up with a total amount of approximately $9619.92 during the 2 years (5119.92+1500+3000). That is a $7380.08 discount above leasing assuming the worst.

Just think what it could be if your credit was simply non-prime rather than subprime, or if the automobile did not have to have just about any significant work. Then think about if you'd picked up a bank loan and ended up paying much less for that car initially. The financial savings seriously begin to add up.

Another factor separate from the entire amount paid over the loan period, with a pre-owned car you'll have something that you are the owner of. Should I choose to purchase my Toyota, I must shell out a further $10,000. It bugs me simply to consider it.

Many people might point out that a new automobile has significantly more prestige, and up to a point that could be legitimate. In this case, I don't imagine so. An '08 Corolla is on par with a used car with regards to prestige.

After all the calculations, getting a good used car usually is a more desirable alternative than leasing. I've learned my lesson, and will undoubtedly be finding a used car once my lease finished. Don't repeat my mistake.

Does it Make More Sense to Buy a Used Car or Lease a Brand New Car?

By: Susan

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