Various vehicle options exist for new or used car purchases that can suit your budget. Depending on the vehicle you choose, you may find that prices for new and used cars are somewhat competitive. Before pursuing a vehicle purchase, determine your vehicle needs and overall costs of ownership.
Price Comparisons
Research pricing, safety ratings, fuel economy, specifications and values at manufacturer websites for new cars. Use Edmunds.com or the Kelley Blue Book website to obtain used car information. You may find that a particular SUV costs over $30,000 brand new but only $20,000 if used. Manufacturers' websites also list any discounts or special rates. Also compare competitors' vehicles. For example, a Honda Civic may be priced higher than a Nissan Versa, although both offer comparable room and options.
Warranty
Details for new-car warranties are advertised on manufacturer websites. Used-car information websites offer information on original factory warranty time periods. Even if a used car has had multiple owners, the factory warranty transfers to the car's new owner. Consider your vehicle's warranty, which can save you money if you need repairs. You can always purchase an extended warranty for a used car, although doing so adds money to your purchase price. Consider the total cost of a used car if purchasing an extended warranty to fairly assess cost differences between new or used options.
Leasing Option
Leasing is available for new cars, which may prove beneficial if you traditionally trade out of your car every 3 years and don't drive more than 15,000 to 18,000 miles per year. Leasing allows you to drive a new vehicle under warranty, which you can return to the bank at the end of the contract term without concern for market value. Term and mileage restrictions apply. You are free to lease or finance a new vehicle once your contract is satisfied. Leasing options for used cars are rarely available, and if you can pursue the option, the payment is often more expensive than financing. If leasing a brand-new car, expect to pay less than a comparable finance.
Insurance
Lenders require a full-coverage insurance policy during the term of your loan. Banks also require a lower deductible and higher bodily injury and property damage coverage than your state requires, which increases the cost of your insurance. Leasing banks often require you to purchase gap insurance, which pays for the difference between the vehicle's payoff balance and insurance payout amount in the event of a loss. Talk to your insurance agent to determine cost differences for any vehicles you're considering.
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