[Guest article]
If you have your heart set on a rugged new Jeep or practical used Volvo, you’ll need to think about how to pay for it most effectively. For car buyers on a budget, it’s important to compare all financing options carefully to find the best rates. The out-of-pocket costs can vary significantly between buying a used car, buying a new car, or leasing a car, even if you’re essentially driving away with the same model. Yet long-term costs must also be looked at to get a sense of whether a financing plan is suitable or not. To find the most agreeable terms, it’s best to weigh all of these options carefully.
Buying New
Buying a new car will involve a high out-of-pocket cost. You’ll be responsible for paying a higher down payment than the other two options, and monthly repayments will most likely be higher. In addition, you must factor in the cost of depreciation. The value of a new car drops sharply during the first three years of ownership, which means that if you want to trade it in during this time you may find that you have to take a financial hit. However, there are certainly psychological benefits to buying a new car and you may benefit from manufacturer warranties and discounts. You can modify your new car whenever you wish, and sell it whenever you are ready to move on.
Buying Used
Buying a used car offers many of the same advantages as buying a new one, but it also means that you’ll be able to pay less up front. You can compare used models at carsales.com.au to find a slightly used Jeep in like-new condition, while saving a bundle on the sticker price. Although your monthly payments will be lower, you may have to pay more in service and maintenance depending on the condition of your vehicle. However, you’ll make up for this with less depreciation, because the car will already have dropped in value if it’s used. With both new and used cars, you can drive your car as often as you want without penalty, and trade it in as desired.
Leasing
Leasing a car is often an attractive option for buyers who don’t have very much cash to spend up front. The deposit and monthly payments are usually the lowest with this financing option, and depreciation isn’t a factor. The downside is that at the end of your contract you don’t have the benefit of selling your car, because it is never yours. You may be able to leverage equity or purchase the car at a low price, depending on your leasing contract. Furthermore, routine maintenance is usually covered in a leasing contract. Yet insurance for a leased car tends to be higher, which may negate this benefit.
Finally, it’s important to remember that there will be a great deal of variation within all three of these financing options. The length of the repayment contract, the interest rates, and the terms and conditions will all depend on your dealer. Whether you plan to buy or lease your next car, be sure to shop around to find the best rates.