That's the question a listener of money expert Clark Howard's podcast asked recently.
Should I Lease a Vehicle Right Now?
Because of the inflated prices of both new and used vehicles currently, you may be thinking of leasing a vehicle and then perhaps purchasing it after the lease is up.
Clark says it's OK to consider leasing a car right now but told the listener, "It seems like you're creating unnecessary complications in your life, because leasing costs are going to be inflated just like purchase costs."
Should I Buy a New or Used Vehicle Right Now?
For years, Clark has recommended buying used vehicles that are around three years old so you don’t have to eat the initial depreciation. But because of the current market, Clark has advice that is a departure from what he has said previously:
“Right now, it makes sense to buy new instead of used with how ridiculously inflated used vehicle prices are,” Clark says.
“I can’t think of another time in my career … that buying new has potentially been — particularly for long ownership-cycle owners — has been typically a better a better decision right now, in the second half of ’21 and now in ’22, than buying a one- or two-year-old used car,” he says.
How Do New and Used Car Prices Compare?
As an example, prices for a 2022 Honda Accord on Edmunds.com range from $26,000 to $38,000 depending on deluxe features. I found a brand-new LX model for $27,135.
I found prices on CarMax.com for used Honda Accords, LX model year 2020, that range from around $26,000 to nearly $37,000.
How To Shop for a New Car Right Now
Work Out the Financing
Don't waste your time thinking about buying vehicles you can't afford. The crucial first step is to get pre-qualified for a car loan through a credit union or online bank.
Once you get the financing worked out, you can shop with confidence because you know how much car you can buy.
Do Your Research
You don’t have to visit car lots physically anymore, although you can if you want to.
The top car-buying websites make it easy by showing their inventory online. Once you've chosen some candidates, schedule your test drive to see if you like the car.
Be Flexible
Bear in mind that you may have to make some concessions on the make and model. If you really want a leather interior, you may be able to save some money – and time – by opting for a car with a cloth interior (which should be a little cheaper).
Also, instead of other deluxe features, you may increase your chances of getting the make and model you want by settling for a vehicle with fewer bells and whistles.
Final Thoughts
Clark says even if you consider leasing a vehicle, you’ll pay more for it because of the car industry’s high prices right now. And while he usually prefers that you buy a used vehicle, the fact that some new cars are currently cheaper than their older models makes it OK to opt for new vehicles in this market.
More Car Resources From Clark.com:
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