Compare the Costs: Buy vs. Lease vs. Buying Used

Compare the Costs: Buy vs. Lease vs. Buying Used

Have you been worried about making the right decision or have been looking for the right way to allocate your funds toward your next vehicle purchase? This article should help you understand what would best work for you, either buying a new or a used vehicle or simply leasing it out. Make sure to pay attention to details in the article, and if possible, gather down notes.

Before making a final decision regarding any of these options, it is imperative to point out the difference in leasing and buying a used and new car. This should help you understand where you stand. Let’s use the Honda Accord for an example to help you understand better.

Considering that the Honda Accord sells at around $25,000, let’s understand how much you’d pay in each of the below-listed scenarios:

New Honda Accord Purchase

Investing in a brand-new car would call for a longer loan term payment. Let’s say that you pay off the loan within five years with an additional down payment of $5,000 or 20% off the total amount, your monthly payment would then amount to $400 along with an interest rate of 3%.

Used Honda Accord Purchase

While the price could differ from one country to another and one store to another, an average cost price for a used Honda Accord would amount to $18,000. Let’s say that you decide to pay off the loan in four years with a down payment of 10% which would amount to $1,700 along with an interest rate of 3.5%, your monthly payment would then amount to $370.

Leasing Cost on the Honda Accord

The leasing contract or price would depend from one dealer to another and could be based on the special offers if any. Including most fees and taxes but not all, one could expect an average monthly payment of $339.

Total Costs

You should understand that when you invest in a new or used car, you’d be able to earn some amount of equity which could be further cashed out in the future when you choose to invest in a new vehicle purchase. However, investing in a used vehicle comes across as the most affordable. You’d end up investing $4,000 as your total cost when compared to a lease and you’d be spending $9,000 less when compared to a brand-new vehicle purchase. Therefore, while the leasing cost would stand at $24,000, the brand-new car purchase would amount to $29,000 and a used car purchase would clock in at $19,500.

There are several pros and cons when it comes to leasing and buying. You need to sit down and understand where you stand and what would best fit your needs. Take time to research online or if time permits, you should speak to people who have dealt with such investments in the past. Most importantly, choose a local and reliable dealership.