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Buy New, Used, or Lease: A Mid-Sized Car Buyer’s Comparison

squeeze more out of your budgetBuying a car can be a confusing if you are unsure whether you want to buy new or used or maybe want to take out a lease instead.

There are pros and cons for each scenario and once you manage to get a handle on some of the key facts and figures, you should be ready to start shopping for the right mid-sized car that fits the bill.

Working out the costs

A lot of our decisions come down to cost and that is certainly the case for a lot of us when we are trying to choose the right mid-sized car.

Your automotive expenses are not just about the purchase price or monthly lease or finance payment that you have to make, it is the ongoing expense of running and maintaining your vehicle.

The cost of keeping your car on the road can vary between makes and models and whether you choose a carmaker such as Hyundai for example or any other badge, you will want to know all the costs that might be facing to keep on the road.

Other aspects of your purchasing decision might also include checking how a make and model compares to another in terms of safety performance, but the starting point for many of us is to work out how much we can afford and what we can get for our money.

Three ways to finance

There are three specific ways to finance the acquisition of a car and the method you use can be down to not just how you want to do the deal from a personal point of view but what you view as the most important aspect of ownership and running costs.

If you buy a car from new and drive it out of the showroom, you can expect to pay an average of about $4,000 as a down payment on a mid-size vehicle with a finance deal that lasts for five years.

At the end of the term, the car is yours to do what you want with it provided you have paid all of the finance installments and any charges to complete the deal. The interest rate that you are charged and how much finance you can get will depend on the strength of your credit rating and if your score is too low, you may need to adjust your requirements accordingly.

If you lease a car, your down payment should be lower, and with a typical mid-size car you will probably be able to get a deal that involves figures that are around $1,200 for a deposit and about $300 per month.

The financing cost of buying a used car will of course depend on how much the car you are buying is being sold for. Again, your credit rating will influence the size of your down payment as well as the interest rate you are charged, so it is a good idea to check your rating before you start shopping around, as this will help you know what you might be able to afford and be accepted for.

Repairs and maintenance costs

Unless you take out a leasing contract that includes the cost of servicing and some repairs, you will be removing a lot of the hassle and strain of finding the money for repair bills when you take out a lease deal.

Most lease deals will involve paying for things like tires so a leasing deal is definitely not cost-free but it should work out cheaper than if you buy a new or used vehicle.

If repair and maintenance costs are one of your primary concerns, you might want to consider a leasing deal over buying your car, but a fundamental point to remember is that you are avoiding some potential repair and maintenance costs because you don’t own the car and simply hand it back at the end of the term.

Advantages of ownership

There are pros and cons to leasing and the same comments apply to car ownership, although there are definitely some advantages to owning rather than leasing a vehicle.

Excess wear and tear and excess mileage will have to be paid for on a lease deal and add to the cost, whereas when you own the car outright or on finance, you can enjoy unlimited driving without being penalised.

Another major difference between leasing and buying, is that you get something tangible at the end of a car finance deal, as you get to keep the car and profit from its residual value, provided you have made all the payments.

Work out what is important to you and once you know how you want to hit the road with your new car, you can then sort out a lease or finance deal to allow you to do this.

Erik Hervas is a Marketing expert at, a company that publishes car listings in Peru. They provide a friendly platform to help users sell their cars and bring buyers by promoting the listings through many channels. Erik graduated as Food Engineer in 2004 but after owning his business he decided to pursue a career in the Marketing field. He currently reside in Ecuador with his wife and two children.



My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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