Compare the Costs Buying vs Leasing vs Buying a Used Car

Into two parts :

1 . Lease , buy new , buy used : If you decide to purchase a car , cold of three different methods of following , analysis of hard cost .

2 . Discussion of non-monetary issues that may affect your decision .

One car , three- way financing

In this analysis , we look at the car holding period average , pork estimates are nearly six years later . As an example , the market value of true of $ 24.500 (TMV ®) price chose the 2013 Honda Accord EX we .

Here , a structured method is as follows: a variety of deals .

Lease : At the time of writing this article , this Accord will have a special lease listed in the rebate page and ourincentives current . It does not require the commission of drive off that does not run from three years ago , lease carry monthly payments $ 344 .

Purchase of new : in order to buy this Accord , we value of $ 24.500 is , chose the five-year loan down payment of 20% of the $ 5.430 . At an interest rate of 3% currently available , the monthly payment is $ 390 

Buy used : 3-year-old car , 2010 Accord EX, used TMV will have a price of $ 17.761 . Select a four-year loan with 10% down ( $ 1.776 ) , we , provide funds to purchase 3.5 % of the four years . (Interest rate used car loan is slightly higher than new car loan interest rates . ) Monthly payment is $ 400 .

In the scenario of ownership of six years of us, we , please keep in mind that it requires two cycles of every three years of the lease . For a new car , in addition to the loan in '15 to pay for the car at all, it is going to be a year of one additional ownership . In the case of used cars , it is two years with no car payment or four-year loan .

After six years, here are the total out-of-pocket costs of each approach (including tax and registration fees for California):

	Leasing	Buying New	Buying Used
Total out-of-pocket costs	$24,768	$28,830	$20,960

In terms of out-of-pocket expenses, leasing appears to cost $4,062 less than buying a new car. Buying a used car is $3,793 cheaper than leasing, and a whopping $7,854 cheaper than buying a new car.

But remember that at the end of two leasing cycles, the person who leased doesn't own the car. He or she has to start a new lease-or-buy cycle. Meanwhile, the person who bought a new car would own a depreciated vehicle worth about $11,000, according to the depreciation listed in Edmunds' True Cost to Own (TCO®) calculator. The person who bought the used car now owns a 9-year-old car worth about $5,000.

When we factor equity into the equation, the cost picture changes:

	Leasing	Buying New	Buying Used
Total out-of-pocket costs	$24,768	$17,830	$15,976

In this basic comparison, it appears the person who leased the Accord paid $6,938 more to drive it for six years than did the new-car buyer. Buying a used Accord saved only an additional $1,854 during this six-year cycle.

Related expenses

We , the owner of the car , it must be pointed out that you are spared the cost of maintenance and repair that occurs aging , when using the car generally lessor . On top of the regular maintenance , the purchase of a new car , at least , will have to pay for new brakes and tires would cost at least one thousand U.S. dollars in the rotation of the tire and oil change usually . The used car buyer , too , and there are these items , need to pay for the repair of some additional , perhaps .

However , I will offset the cost of maintenance and repair for those who bought a car lease , is the high cost of car insurance . The insurance for lease cars such as the Accord EX ​​such , it is possible to add up to $ 900 for a six-year period , will each year at least $ 150 extra .

So , people who lease money on extra maintenance costs , save to pay nearly as much in extra premium . This is close to being a wash .

Other advantages of the lease

The people of the lease , it is true that you do not have of what the car at the end of the lease , but they have the opportunity to buy a car in the price set in advance . The finance company , at the beginning of the lease , the purchase price of the car lease is set . There are several advantages to this .

First of all , lease , to protect consumers from depreciation excessive . Market value of the car as long as the drop in unforeseen circumstances such as rising gas prices like this because of this decline in value , do not come into contact with consumers . Particularly well , if it holds its value , on the contrary , the consumer can be resold either to buy a car at bargain prices , whether to keep it leased vehicles . In some cases , consumers can take advantage of capital that has been built up in the car lease .

Another great benefit to the lease , is to provide a tax credit attractive for those who are using the car for business . For more information about this matter , the accountant is the best resource .

Charm of ownership

This is , to put a price tag on the value of ownership is difficult . People buy a car , will be able to own it , to experience the pride that goes it . Beyond the fun of abstract only have a nice car , ownership does offer several advantages other .

Likes you , you will be able to change the car accurately without fear to break the lease agreement you. Excess consumption is not a problem for the car buyers . In addition , whenever they want of you , when the lease is up , owning a car gives you the flexibility of more and more to sell not the car .

Finally, there are some other important elements to consider as you decide. These are harder to monetize:

·         Leasing provides the enjoyment and prestige of driving a newer car more often.

·         Leasing puts you in a new car that has the latest safety, technology and comfort features.

·         Leasing in three-year cycles means you are always under the manufacturer's bumper-to-bumper warranty.

·         Owning a car allows unlimited driving with no mileage penalty. Leasing limits a person to only 10,000-12,000 miles per year. After that, each mile typically costs 15 cents.

While there are many factors to consider when making the lease-or-buy decision, the best place to start is with the numbers. Do your own calculations, factor in the intangibles and the best decision will emerge.