Buying vs. Leasing a Used Car

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Compare the Costs: Buying vs. Leasing vs. Buying a Used Car

To any individual who is looking into purchasing a new vehicle, there are three main options for new ownership: buying new, buying used, or leasing. There are two sides to every story and this topic is no exception. Some people look at the numbers and take the cheaper option. Other people are willing to pay more for driving a new car. Owning and operating a vehicle can be expensive, and for the average household budget, the car payment is one of the biggest opportunities for savings.

Automobile expenses are one of the largest aspects of any family budget and may be the easiest to alter depending on purchasing decisions. Most consumers understand the monthly payments are higher to buy or lease a new car. However, many people overlook the fact that new cars also mean higher insurance and DMV fees. Over time, these extra expenses add up. In this article, we are going to focus on the economics of the three different scenarios.

Buying a New Car

Purchasing a new vehicle is a method preferred by a large share of automotive consumers for a variety of reasons. Buying a vehicle provides full ownership and the utmost flexibility. While the American public has traditionally preferred to own a new car, the cost of new cars has risen faster than has the earning power of most people.

Advantages of Buying a New Car

Those who purchase a vehicle enjoy a wide range of new car options, are not subject to mileage constraints, and are free to upgrade or improve things like tires, rims, window tint, etc.

Disadvantages of Buying a New Car

The major disadvantage of buying a vehicle is the upfront cost at the dealership. The second-most expensive purchase many Americans make can deeply impact their budget and savings account.

New Cars by the Numbers

Because the cost of new cars has risen, and the purchasing power of individuals has decreased, the length of loans has also increased. People once financed cars for two or three years, meaning that the car was fairly new when it was completely paid off. Now, most new car loans stretch to five or six years to keep the monthly payments lower. During the first year of ownership, the costs of a new car can be very high with sales tax, expensive DMV and registration costs, etc. However, once the loan is paid off, the car is still fairly new and expenses are lower.

Vehicle Leasing

Leasing a new car is an attractive option because the price to purchase a new car can be unaffordable. For those car owners who don’t anticipate keeping the car very long and desire newer vehicles on a budget, leasing is a viable option. Oftentimes, small businesses and self-employed individuals can also benefit through leasing. Leasing a car may require a first month's payment, a security deposit, a small down payment in addition to taxes; however, many times, dealerships will run a special promotion for lease options that require zero money down due at lease signing.

Advantages of Leasing

Leasing a vehicle relieves individuals from the effects of depreciation in value. It provides the option for drivers to have access to a new or nearly new car every few years, without having to worry about trade-in or resale value. Leasing can also be a positive path for car ownership. At the end of a lease term, leasing parties have the opportunity arrange purchasing the leased vehicle when the agreement expires.

Disadvantages of Leasing

The biggest difficulty some may encounter in leasing is mileage limitations. Through most lease contracts, there is a set amount of miles a driver could take the vehicle per year. While a leased vehicle can be driven beyond the set distance, the excess miles (or overage) will often be calculated and presented as an added expense once the vehicle is returned. Through leasing, individuals are also required to maintain specific care and standard maintenance at only selected service centers.

Leasing by the Numbers

Leasing’s main advantage is that it gets the consumer into a brand new car with a low, or even no, down payment, lower monthly payments, and lower sales tax. Consumers only pay tax on a leased vehicle based on the amount of the car’s value they use. They may have to pay more for insuring a leased vehicle than for a new car or a used car, but overall, the out-of-pocket expenses of leasing a car in the first year are less than a new car. However, over five years, those who purchase a car have nearly, if not completely paid off the vehicle and the result is car ownership with no monthly payment. Those who lease will continue to make monthly payments, without gaining equity.

Buying a Used Car

Buying a used car is often the most economical choice for car buyers. There is always a wide range of used cars available, some that have been "used" more than others. The key to buying a used car is to find a vehicle that has little depreciation remaining, but plenty of remaining use.

Advantages of Buying a Used Car

The advantage of buying a used car is that the buyer is not required to take the hit of depreciation. A car that is two or three years old has already been through its biggest depreciation dip, which provides the buyer with a high quality car at a more reasonable price.

Disadvantages of Buying a Used Car

The disadvantages of buying a used car come with the risk that buyers take when purchasing a car that has been previously used by someone else. Buyers cannot ensure what the vehicle has been through prior, and it can be hard to guarantee the care or quality of maintenance that the previous owner displayed.

Used Cars by the Numbers

In the used car market, the prices of vehicles are much less than buying the same model new. For those who buy from a dealer, most buyers typically make a down payment and take out a loan to pay the balance. Even while used-car loans have higher interest rates than do new-car loans, and compensating for slightly more repairs and maintenance than those who choose to purchase new or lease a new car, the used options are still more economical. The real benefit to buying used is the potential savings seen by driving the car years after the car payments have ended.

The Five Year Rule

The first-year expenses for any vehicle are the most expensive. Most Americans keep their cars for approximately five years, and it is at this point that the economic picture improves. The real savings of owning a used car comes from all the years of potential service it provides after it’s paid off.

In order to adequately compare new, used, and leased options, it is necessary to examine the numbers over five years. In the long run, leasing is the more expensive option between leasing new and buying used, and in fact, is more expensive than buying a new car, because at the end of the day, the buyers receives no equity and no car. Even if the dealership offers a better purchase price after the lease is up, it will still be more expensive than purchasing the car in the first place.

Buying a New or Used Car on eBay Motors

While multiple dealerships may line the streets, more people are heading online to sites such as eBay Motors to find that perfect car at a bargain price. Although many people are wary of buying a car they’ve never seen before, there are millions of satisfied buyers who bid on cars every day.

Searching for Cars on eBay Motors

The easiest way to search for cars on eBay Motors is to understand the type of vehicle you are looking for and use the simple search tools to meet your criteria. Enter in the year, make, and model you desire to see the options eBay Motors has available. For example, you can search for a 2010 Honda Civic, or try a more general search, such as "pre-owned Civic." Take advantage of eBay’s certified pre-owned vehicles. These cars have been inspected at a local auto dealership and usually come with a warranty. They will have been checked for any mechanical problems, hidden damage, or mileage discrepancies. If possible, look for no reserve auctions. These are cars that don’t have a reserve price that has to be met before the car can be sold. Buyers will generally get a better price on a car with no reserve.

Researching eBay Sellers

eBay reviews all sellers and allows customer feedback. If the seller of the car you’re interested in has a history, you can get a reliable idea of his or her trustworthiness. Don’t forget to read the comments left by other buyers to determine how previous transactions have been conducted.


There are both advantages and disadvantages to purchasing or leasing a new or used car that have been outlined in this guide. The decision should be made determined on the buyer, and his or her needs, budget, and personal preference. It is clear that in the long run, buying a used car is the most economical way to drive. Using the information presented in this article, it costs more to lease a new car over a five-year period than to buy the car outright, and more to lease than to buy a used car for the same amount of time.

eBay Motors has plenty of new and used options to provide for buyers, regardless of the type of car you are looking for. Often, working through eBay Motors can be easier than the haggle and hassle of local used car salesmen. After determining the best financing option for you and your family, head to eBay Motors to find the perfect car at a competitive price.

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