Thinking about buying a new car? Here are some quick tips.
Buy, don’t lease. Unless cars are one of your life passions and you can afford to treat them as a luxury item, you’re better off buying a slightly used car and driving it for a long time rather than continuously leasing.
Buy two- to three-year-old cars. Program cars and lease returns — but not former rental cars — with reasonable mileage for their age. You’ll save on the massive depreciation that happens in the first few years of ownership.
Finance or pay cash? Less clear-cut. If you’d use cash that’s otherwise sitting in savings and you have enough other reserves for an emergency, pay cash — that money is making almost nothing where it is. If you’d have to pull from investments, it becomes a question of rate: what you’d pay versus what your investments might (not guaranteed) earn. There’s no bad decision here, so if you have a strong gut feeling, go with it.
Drive your car as long as you can. Every car eventually becomes a repair nightmare, but if you can tolerate a day or two in the shop per year, you’ll likely save a lot over time. Goal? At least 150,000 miles and 10–12 years — achievable for most cars these days. Be content with what you have.