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Drive Off With the Best Deal on a New Car

By Nadine Cheung Posted 10:00AM 08/31/12 Savings Experiment, Travel Industry |
Savings Experiment: Vitamins

Do you own or lease your car?

Did you find our video on cars helpful?

Getting a new car can be an expensive expenditure, but there are ways to save money in the process. Here, our experts break down the costs of buying versus leasing a new vehicle.

When it comes to purchasing a new car, you'll likely be financing (unless you are paying in full). Initially, this requires a down payment of 10 percent of the price of the vehicle, plus sales tax. That means you'll need to have anywhere from $5,000 to $10,000 up front.

Leasing is far less costly. You'll need to pay about $1,000 to $2,000 in fees, have the first month's payment and pay a security deposit. However, lease agreements are negotiable, so you may be able to get out of paying the security deposit, as well as some of the processing fees.

In addition to lower up front costs, monthly lease payments tend to be lower than financing payments. So, in general, leasing is the best deal -- that is, if you're only in it for the short run. Those who are only interested in having your car for two to four years will benefit from this option the most, since it leaves you with lower monthly costs and more cash on hand. Keep in mind, though, you won't own anything.

If you're in it for the long haul, savings are on your side, too. Those who plan on having their car for seven or more years will be happy to know that by then the cost of ownership falls below the cost of leasing. So either way, it's a win-win. Just evaluate which situation suits your life best and you'll be on the road to savings.
Tagged: best deals, buy or lease, buying a car, buying or leasing, cars, cheaper to buy a car, cheaper to lease a car, leasing a car, Savings Experiment, SavingsExperiment, Travel & Autos, travel and auto

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Jeremiah

Hello....ever thought about the equity you have in a car when you BUY it? On a $40K car, I paid just $100 more each month over the lease price for five years, and after the car was paid for, it was worth about $15K (the equity) and the cost of that equity was only $6000 (60 months times $100 a month), or to put it another way, I had a net $9,000.

If I'd leased the car, essentially for a payment that was $100 less a month, I got no equity - I'm not the owner of the car - I have 0 $.

So, by paying $6,000 more foir five years, I eneded up having a $9,000 trade-in. I could ave paid $6,000 less, and had nothing to trade in. DOH!

My monthly payment today with my trade in for a NEW same brand and type car is $150 a month less than my old payment.

October 30 2012 at 4:52 PM Report abuse rate up rate down Reply
1 reply to Jeremiah's comment
Rose Lee

agree with u dear.... http://autos-korner.blogspot.com

January 11 2013 at 2:08 PM Report abuse rate up rate down Reply
poptop7171

What a worthless article this is, worst I have ever read on the subject. Nadine Cheung is a certified idiot.

October 30 2012 at 3:42 PM Report abuse rate up rate down Reply
Jock

Among the dumbest articles I've read in some time.

October 30 2012 at 12:57 PM Report abuse rate up rate down Reply
dde82

Article also doesn't talk about mileage limits that are placed on leased cars. Some people (myself included) has a job where we need to drive. This past year, I drove over 40k miles (which obviously isn't normal), but think the usual limits for leased cars is around 10k miles a year which would mean loads of additional fees.

October 30 2012 at 9:48 AM Report abuse +1 rate up rate down Reply
1 reply to dde82's comment
ernieepm

You can get lease rates with almost any mileage limit ..... With full maintenance included! If you are driving 40k a year...yikes!! Thats! 160...200k by the time you pay for it...... All those maintanence costs and a near worthless auto in the end!!

October 30 2012 at 12:30 PM Report abuse rate up rate down Reply
smily1118

not sure where they are getting their numbers from.... but i have never had to pay $5,000-$10,000 up front when i bought any of my new cars.... never had it cost that much extra when i financed them either. there are so many more options when you buy new. if you qualify you can get a lower intrest rate or a 0%APR. some places still offer a "cash back" option if you finance.or they offer a "maintinence free" deal when you buy. leasing only makes sense if you insist on getting a new car every 1 - 3 years... not 7 like the video suggests.

October 30 2012 at 7:32 AM Report abuse -1 rate up rate down Reply
stvhndyman

We live in Europe. With the very good transport system we don't really need a car. If we do we just rent one. Cheaper than leasing or owning. Saves on insurance fees for the year, taxes, etc.

October 30 2012 at 3:29 AM Report abuse -2 rate up rate down Reply
shadowstar861

"Initially, this requires a down payment of 10 percent of the price of the vehicle, plus sales tax. That means you'll need to have anywhere from $5,000 to $10,000 up front."

That is crazy! That would mean the car costs $50,000 to 100,000! You can buy a 2012 fully loaded SUV for about $10,000 less than that... after tax, tags, and title. Where are they getting these numbers?

October 30 2012 at 1:18 AM Report abuse -1 rate up rate down Reply
labourboss

Leasing works out if you have a business, that way you get to write off the cost of you lease rather than deal with depreciation tables miles. Other than that buy them new and drive them until the wheels fall off.

October 30 2012 at 12:10 AM Report abuse -1 rate up rate down Reply
jurgenjoshua

why pay for a car for years and then have to give it back with nothing in return. then if you don't return it in mint condition they try to add more fee's. NO WAY. ALWAYS BUY.

October 29 2012 at 7:35 PM Report abuse +1 rate up rate down Reply
Curt's Stuff

Best deal is to BUY a LEASE return.

October 29 2012 at 6:20 PM Report abuse -2 rate up rate down Reply

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