New Cars vs. Pre-Owned Cars

If it’s time to replace or upgrade your vehicle, you may be thinking about whether it makes more sense to buy a new car or a pre-owned car. There are pros and cons to both options, but here is the trade-off in a nutshell. With a new car, you get greater peace of mind, more flexibility to customize your options, and dealer-factory incentives (such as cash back or 0% financing) that are not available for pre-owned car purchases. With a pre-owned car, you can often enjoy substantial savings and still get many of the benefits of buying a new car. We’ll take a closer look here.

Depreciation and Gap Insurance

You may have heard it said that a new car loses thousands of dollars in value the minute you drive it off the lot. While it is true that a vehicle’s depreciation is sharpest during the first three years of its life, this has changed in recent years. Today’s new cars tend to retain their value better than new cars did in the past. The field of automotive engineering has improved, and mechanical issues do not develop as easily as they did in older cars. However, depreciation is still a significant factor. You’ll also need to purchase gap insurance for a new vehicle in case you are involved in an accident while the car is still new (this is often also necessary for pre-owned vehicles, but not always).

Monthly Payments

There are a number of variables that affect your total monthly payment for a car. The amount of money you have available for a down payment, the value of your trade-in (if you have one) and your credit score are obvious heavily-weighing factors, but these will come into play regardless of whether you buy new or used. If you purchase a new vehicle, dealer-to-factory incentives can significantly lower the amount needed for a down payment. You can also apply cash back to the principal of the loan, which will lower your payments a bit more. Finally, with new vehicles, you can typically get auto loans with longer payback periods (up to 72 months) whereas with a pre-owned car, you may only be able to get 48- or 60-month financing. The net result: new vehicles are often just as affordable as pre-owned vehicles, and sometimes the monthly payment even works out to be less.

Vehicle Condition & Price

One reason why some people prefer new vehicles over pre-owned vehicles: they may be concerned about the car’s history (or whether or not the prior owners took good care of the car). While this is a legitimate concern in many cases, buyers don’t have nearly as much risk as before. The stereotype of the used car salesman has become largely a thing of the past—partly because vehicle history is much more transparent than before. When dealerships take cars on trade-in, they are able to assess the market value of the car based on a more complete set of information. This transparency has led to a more level playing field. It’s difficult for dealers to make excessive markups on pre-owned cars—and it’s easier for you to see the full picture of what you’re buying before you buy it.

There’s no black and white answer as to whether it makes more sense to buy a new car or a pre-owned car, but you can find an excellent selection of both at Folger Subaru. Our sales consultants will help you to find the vehicle that meets your needs with no hassles or high-pressure sales tactics.

Stop in for a test drive today.





5701 E. Independence Blvd Charlotte, NC 28212
Sales: (888) 703-8351
Service:(866) 306-3293
Fax: (704) 535-8204

Leasing a Car vs. Financing

Is it a better deal to lease or buy a new car? The answer to that question depends on the specific situation, but here are a few general guidelines that you can use to determine the best financial approach for selecting your next vehicle.

Value for the Money

When you buy a car, you are paying (or financing) the full retail price of the vehicle. When you sign a lease, you are paying for the expected depreciation on the vehicle for the life of the lease. (For simple math, if you lease a $20,000 car and it is expected to lose half of its value, your lease payments will total $10,000. If you buy the same car, you pay $20,000.) This means that leases allow you to have access to a higher end car than you what you might be able to afford to buy.

Equity

The most obvious benefit of buying a car is that you own equity in the vehicle. When you make payments on a car loan, a portion of the payment goes toward the principal. If you make all of your payments on time, you will own the title to the car at the end of the agreed-upon amortization schedule. With a lease, you own nothing when the lease expires. (One important point to make about vehicle equity: it’s not the same as home equity. If, for example, you have determined that it’s better in your situation to own a house than to rent an apartment, don’t jump to the conclusion that owning a vehicle is automatically better than leasing one. Houses tend to appreciate in value over the long term, whereas cars always depreciate in value.)

Market and Price Fluctuation

Leases are more predictable when it comes to market value, since the amount of depreciation that you are paying for is agreed upon at the beginning of the lease, regardless of market conditions at the time when your lease expires. In other words, if you lease a car, the lessor assumes the pricing volatility risk. When you buy a car, on the other hand, you will have to cover the difference if your car’s market value is less than expected (or reap the benefits if it retains more value than expected).

Mileage

Auto leases restrict the number of miles that you can drive the car. It’s typical for a lease to come with a limit of 12,000 miles per year. If you exceed that limit, you will be assessed a per-mile overage fee. This can add up quickly, especially if you take a lot of long road trips or if you commute a long distance to work. However, many dealers also offer high-mileage leases that can work out to be advantageous in a number of cases. When you own a car, there are no restrictions on mileage.

Taxes

If you use your car for business at least part of the time, you can deduct a portion of your lease payments on your taxes. Leasing a car can sometimes offer distinct tax advantages for this reason. You should consult your CPA or tax advisor about the tax implications of owning or leasing your vehicle if you plan to use it for work.

Maintenance

If you drive home a new vehicle—whether you buy it or lease it—the manufacturer’s warranty will cover all of the major systems, usually for at least three years. Certified pre-owned vehicles typically come with some degree of warranty coverage as well. It’s common for leases to expire before the manufacturer’s warranty runs out, which means that you won’t be paying any significant maintenance costs aside from oil changes and other regular maintenance. Longer leases may extend beyond the warranty period. If you own a car and plan to keep it for a long time, maintenance may become more of an issue after a few years.

Upgrades and Customizations

If you have a desire to customize your vehicle, you will have much more flexibility and freedom to do so with a car that you own. For example, you may want to install an aftermarket stereo system, change the paint color or make any other cosmetic enhancements, a lease will make upgrades difficult or impractical. You may have to reverse any modifications prior to turning in the car at the end of the lease (aside from the fact that you’re paying to improve someone else’s vehicle).

It’s impossible to give a generalized answer as to whether it’s better to lease a new vehicle or to buy one, especially since lease terms can vary widely. Not sure whether a lease or purchase makes the most sense for you? Stop in or give us a call today to discuss the vehicles and options best suited to your needs.





5701 E. Independence Blvd Charlotte, NC 28212
Sales: (888) 703-8351
Service:(866) 306-3293
Fax: (704) 535-8204

#ShareTheLove Event 2014: Thanks for Your Support!

The 2014 Share the Love Event was a wonderful success, and our team was pleased to be able to donate some much-needed supplies to the Humane Society of Charlotte, thanks to the generosity of our local community! This Subaru Forester is filled with dog & cat food, kitty litter, toys, treats, bedding and blankets donated to the Humane Society by our employees and customers.
The Humane Society of Charlotte adopted out over 3,800 animals last year, and their goal is to reach 4,000 in 2015. They provide a wonderful service to our local community, and their outreach program offers free spay and neuter for certain areas of our city. We are grateful for the opportunity to contribute in a small way to their organization.





5701 E. Independence Blvd Charlotte, NC 28212
Sales: (888) 703-8351
Service:(866) 306-3293
Fax: (704) 535-8204