What to Consider When You Need a Car

Maybe your current vehicle is falling apart. Perhaps your family has outgrown that compact. Could be that pump prices have you growling at your gas-guzzler. Or maybe you’ve just decided that it makes sense to park something different in your driveway.

No matter what the reason, remember that a vehicle is more than transportation. It’s a significant financial investment. For most people, buying a car or truck is the second biggest financial investment they’ll make (a home is number one). You want to be certain that you’ll get the best value for your investment, both today and many miles down the road.

Whether you’re planning to buy a compact, a pickup, a sports car, an SUV, or a luxury sedan, you have to make some important decisions– and no, we’re not talking about the color. Should you buy a new vehicle, or take a chance on a used car? If you’re looking at new vehicles, does it make more sense to buy or to lease?

There are as many good reasons to choose a new vehicle as there are to choose a used one. While used vehicles can be dramatically cheaper, they may show signs of wear (or may have problems that aren’t obvious). New cars usually come with factory warranties that provide years of protection against defects. Used-car warranties are usually much shorter and cover fewer systems.

The biggest argument against a new car is depreciation. New cars lose a significant amount of value as soon as you drive off the dealer’s lot. Often, you can get a low-mileage used car that’s nearly as good as new for far less money. Just be sure to have it checked by a trusted mechanic.

Many car dealers suggest leasing as an alternative to buying. With a lease, the leasing company actually owns the car, and you pay a monthly amount to be able to drive it. While the monthly cost of a lease may be lower than monthly payments on a loan for the car, at the end of the lease you don’t own anything. That means that leasing can actually cost you more in the long run. In addition, many leasing companies charge extra if you exceed a certain number of miles or if the vehicle has even minor damage. If you’re considering a lease, be sure to consider all of the costs and read the agreement very carefully.