Depends on the type of car you want, if you are buying something that holds value relatively well (think lexus) then buying makes more senses I think if you can get a good deal. But if it’s something like a Jaguar that tends to lose value fast then leasing makes more sense…
I do not think there is efficient market for used cars, depends on the situation of the sales person you can get a significantly better deal than everyone else. Also try get it from a place with lower overhead as they can offer you a better deal on the car. Never go to car dealerships in the city…
the new/used gap changes over time. currently, used cars are going for the most they ever have relative to new cars due to a lack of supply in the used car market. now is the best time in history to buy a new car versus used. so currently, you are right that buying a new car barely costs more than buying a used car. a key difference between new and used these days is used will come with far fewer base tech features than new. this difference needs to be priced in. would you compare an iPhone 4 to an iPhone 5 and say they’re the same thing? cars are technology now.
i think the only real value in the used market right now is if you buy a 10-20 year old car for next to nothing and drive it for years. almost everyone will not do this.
Would depend on the lease rates. Often, the rates are much better on cars that hold their value. And there is value in offloading excessive depreciation risk.
The answer depends entirely on you. How much do you drive? How long do you hold onto your car?
Agreed.
(My .02 - whether you lease or buy, trading cars in every 2-3 years is a waste of money. It’s strange that a group of BSD’s that bring home eight figures in tax-free interest income would throw away money by trading cars in every two years, then quibble over a $2 razor cartridge.)
I’d say if you’re financing it anyway, lease. You get a free put option. You don’t have to return the car at the end of the lease, you can keep it and just pay the balance owing. I’m not sure I see the value in financing over leasing unless the rate differential is greater than the value of the put. Best option: buy something you can afford instead in cash.
You’re saying that, in theory, you get the option to buy a used car at a used car price. But are you sure you are getting the right price? In my (very limited) experience, they want to charge new car prices for the used car.
the current situation is similar in both canada and the us. the key is the technology. between a 2015 car and a 2011 car, there is probably a $5,000 difference in technology and fuel economy efficiencies alone which makes up for most of the price depreciation.
You know the price 3-4 years out when you enter the lease. If the car depreciates more than that, then you put it back to the dealer and buy a used on. If the car depreciates less than that, then you keep the car. It’s your option. I guess it’s call option on the vehicle in 3-4 years time, not a put.
I don’t put a ton of mileage on cars. Last lease was 3yr/36,000 and I only got it to about 27k. I suppose I’ll just lease again but I was definitely considering shopping around for a 2-3 year old car… however as stated earlier it doesn’t look like prices are where I’d expect them to be, definitely higher than I was anticipating.
the decision to lease vs own should be one of relative value. I think that’s where a lot of people fall into the trap of leasing more car than they should. they can afford a relatively higher monthly payment, so they lease a car that they could not afford if they were to buy it. the lease option allows them to squeeze into an otherwise unaffordable car – bad idea. leasing is leverage.
the market should correct itself yeah. only problem is that a major offsetting dip in new car sales could be in tandem with economic recession which would hurt used car prices. considering many cars will be “near-self-driving” in 5 years, used cars will look like fred flinstone’s car by then.
if electric cars and self driving cars will blow up in 5 years that will most likely put downward pressure on cars being leased today coming off lease in 5 years, dealers will be stuck with cars they wont be able to sell. i wonder if they are taking into account a discount in the future for gas cars when calculating future trade in value.
Anybody know the pricing details and markup on cars on the lot? The car company’s like to offer “employee pricing” as an incentive to get you to buy. Isn’t this just on the lower end of the pricing spectrum for new cars? How much is the dealer actually paying for say a $60k car (as the MSRP sticker price)?
if buying used. luxury is better than regular. luxury has more depreciation so better price when you buy.
for example. you can drive a 2013 s class for ~35k with ~35k miles granted this car sold msrp for over 100k.
personally though i recommend getting luxury cars around 20k.cuz they depreciate like 4k-15k/year, but stop doing so around the 20k level. (1k-2k depreciation).
but yes i agree with igor. I feel i will drive my current car until there are self driving cars which should come out 2020+. if my car breaks down before then. i might just buy a hyundai genesis or equus (used). great value cars with luxury.
i got a friend who owns a few dealerships. in new cars they make money on markup. in used cars. they make money off interest. used cars typically for poorer peepz. and when its used, they usually get a regular car like a camry, etc.