Is it better to buy a new or used car – or lease?


A line of Mercedes cars' front ends in a car dealership parking lot.

Before you decide on how to finance your next car, check out the pros and cons of each option.

There’s no one-size-fits-all answer to the question of whether it’s better to buy a new or used car, or lease one. Here are factors to consider to help you make a smart financial decision when you finance your next vehicle.

New car pros and cons

On the plus side, a new car frees you from worries about breakdowns and major repairs for a long time. New cars have the latest safety features and highest fuel efficiency. Plus, you’ll get the manufacturer’s warranty and sometimes maintenance services.

One major downside of purchasing a new car is that the value drops 20 to 30% the moment you drive it off the lot. If you keep cars for a long time, this doesn’t matter as much as if you trade them in every two or three years.

Also, you’ll face higher insurance rates with a new car because of its higher value.

Buying new might be right for you if you:

  • love the experience of having a new car
  • don’t mind taking a hit on depreciation
  • keep cars a long time

Used car pros and cons

If you buy a car that is two to three years old, you’ll pay significantly less than the cost of new because of depreciation and wear and tear.

Buying used also offers an opportunity to get more bells and whistles than you could afford new.

You’ll also save with lower insurance rates because the car is worth less.

The biggest disadvantage is that you’ll face higher repair and maintenance costs. You also won’t get the latest technology for safety and fuel efficiency.

Buying used might be right for you if you:

  • want to limit expenses
  • want more options than you can afford with a new car
  • don’t mind flaws like dings or scratches

Leasing pros and cons

With auto leasing, depreciation is not a concern and up-front costs are lower because there is low or no down payment. Also, monthly payments are usually lower compared to purchasing.

One reason some folks avoid leases is because you turn in the car at the end of the lease. Ownership always remains with the leasing company.

Depending on the requirements of the lease, you may need to carry more insurance coverage than if you bought the car.

And, at the end of the lease you could face additional charges if you exceed the mileage allowance or turn the car in with excessive wear and tear.

Leasing might be right for you if you:

  • don’t drive a lot of miles
  • drive the car for business
  • need the reliability of a new car and have limited cash flow

When you need an auto loan

Each year, we help thousands of members get the wheels they want with competitive rates, and we can help you, too! View rates and apply online today.

Do you have auto loan questions? Call our knowledgeable loan professionals at 800.991.2221. If you’re ready to buy your new ride, apply here. We’re here to help you get where you’re going!

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