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Buying a Car: New, Used, or Lease

Buying a Car: New, Used, or Lease 

Contributions done by: Mikayla Orser & JW Rayhons 


In her used red 1996 Honda Prelude driving home on Dixie Highway in Erie, Michigan Emily’s car comes to a progressive stop. At around 3:30 in the afternoon on a Saturday she is broken down next to an abandoned marina. She’s only about 3 miles from home and wondering what she’s going to do. She attempts to start the car back up but it won’t even turnover; it makes absolutely no sound. What is her next move? A call to dad. He arrives at the scene, pops the hood and discover a chewed-up timing belt, 3 of 6 spark plugs are blown, and who knows what else. Is the car worth saving? 

Used Cars 

The term “used car” takes on a plethora of meanings, it can mean anything from a Certified Pre-Owned to a 1967 Porsche 911. Now, the average American doesn’t consider buying a used Porsche because those have appreciated value. The draw to buying a used car is that it has depreciated to a reasonable market value that you are willing pay. A red 1996 Honda Prelude was introduced to the market for a price of approximately $24,000. In our story above, the car was bought for $1,200 in 2012; the 16-year-old car had depreciated so much that it was worth 5% of it’s original value. So, is a used car right for you? 

That depends, maybe a used car is right for you but something a bit newer. I grew up in a family where buying and selling cars was the norm. Our rule of thumb was that if it’s 10+ years old it may not be worth the investment you will need to make it and keep it running. However, there are some brand exceptions to this rule, but that is where you will need to do your own research. You’re always going to be better off buying used instead of going for the shiny new model (Ramsey Solutions, 2019). Buying used ensures that you are getting a good deal, the car may still be under warranty, and it should be reliable. 

New Cars 

As with many subjects there are pros and cons to each. A few pros to buying a new car are worry-free use, avoid lemon laws, potential for better gas milage, financing at a lower interest rate, and potential dealer incentives (Caldwell, 2020). However, you will have to weigh your cost of buying new because the largest disadvantage is that you will lose money as soon as the car leaves the lot. “A new car takes it’s biggest depreciation within the first two to three years” (Caldwell, 2020). In turn, the largest risk to buying a new car is the loss of a substantial amount of money. There are exceptions to this rule, such as supercars like Ferrari, Lamborghini, or Porsche. As I mentioned previously, the average American will not be buying any of these brands. Therefore, the biggest hit you will take is your pocketbook. 

Leasing a Car 

Lewis states that, “Leasing is a lifestyle choice...” (n.d.). The ability to have a brand new or next to brand new car that you pay lower monthly payments sound intriguing. In addition, leasing can come with a multitude of incentives. The first one being a buy-out. When you sign the lease agreement there is a buy-out number on there that looks appealing when you first sign, but two or three years down the road it may not look so good. 

Two years ago, I leased a 2018 Chevy Equinox, my monthly payment was significantly less than if I had outright purchased the vehicle. This was appealing to me because I was planning a cross-country road trip from Michigan to Arizona, and I needed a reliable vehicle. The buy-out I had agreed to in 2018 was roughly $18,000 at the end of my 24- month lease term. The vehicle at the time was being sold for around $25,000. However, when 2020 rolled around the car’s market value was only $15,000 on it’s best day. What was the alternative? Have a dealer buy the car off me and pay-off the rest of my payments and my turn-in fee. 

See, with a lease there are a multitude of hidden fees, stipulations, mile limits, time limits, and other aspects that the dealer doesn’t tell you about. There are fees to lease the car, fees to turn-in the car, fees if you go over your miles, you may have to pay for the maintenance on the vehicle as well. Leasing is truly a lifestyle choice and it’s one that needs to be deliberate. 

So now what?

As you can see, whether you buy new, used, or lease a vehicle these are all major decisions. There are a variety of factors that go into understanding what you’re getting into financially. I recommend doing your own research, reaching out to a financial professional, or at a minimum read car forums on the specific vehicle of choice. These resources will be able to help you make the best decision for you! 


If you are looking for a financial advisor team focused on your unique financial situation, communicates openly, and that puts you and your goals at the center of the relationship, call us at (480) 507-2425 or contact us online. We’d love to meet you.



Mikayla Orser is a Non-Registered Associated Person with Voya Financial Advisors. Mikayla cannot offer securities or advisory services.

The content in this article was prepared by the article’s author. Voya Financial Advisors, Inc. does not endorse its content, and the views expressed may not necessarily reflect those held by Voya Financial Advisors, Inc.