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New, Used or Lease

In this unit you're going to calculate the monthly ownership costs of two vehicles that you're considering buying. Before you can start comparing vehicles, one of the first decisions you have to make is whether you are considering buying a new vehicle, buying a used vehicle, or leasing a vehicle. You probably already have some knowledge about each of these ownership options. Download this graphic organizer and create three files: New, Used and Lease.

Create a graphic organizer for new, used and lease vehicle ownership options

The total cost of owning and operating a vehicle.

For each option, use the organizer to make point form notes detailing what you already know about:

  • the positive aspects of that option
  • the negative aspects of that option
  • aspects of the option that are interesting to consider

After you've written down what you know about each option, find one or two articles about the differences between buying new vehicles, buying used vehicles and leasing vehicles (Search: buy + new + used + lease). Add any new material that you learned to the graphic organizers. If you come across terms that you do not understand, add them to the interesting box of the organizer.

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Which Option is Right for Me?

Buying a New Vehicle

Buying a new vehicle is often an expensive option. You will have high monthly loan payments and new cars depreciate in value rapidly in the first few years of ownership. However, there are also advantages to buying a new vehicle.

New vehicles are reliable and are unlikely to need repairs. When they do require repairs, often the cost will be covered under warranty.

When you're buying a new vehicle, you may be able to arrange financing through the dealer. Often, dealerships will offer low interest rates that will reduce the financing cost of your vehicle.

New vehicles will also usually include the most recent safety and quality of life features.

Vehicles go down in value over time. This is known as depreciation.

A manufacturer's warranty covers the cost of repair to some parts/systems of your vehicle for a certain time period or a specific amount of mileage.

How much interest you will have to pay on the money borrowed to buy the vehicle.

You will select two cars to compare.

New vehicles are reliable and have up-to-date safety features.

Photo Credit: Lister Group via Flickr

Buying a Used Car

Used vehicles offer low monthly can loan payments but uncertain repair costs.

Photo Credit: Buglugs via Flickr

Buying a used vehicle is a cheaper alternative to buying a new one. Because used vehicles are less expensive than new ones, your monthly loan payments will be smaller. However, older vehicles are more likely to need repairs and those repairs would not be covered by a manufacturer's warranty.You can buy a used car from a dealer or from a private individual.

If you buy the used car from a dealer, you may be able to arrange financing through the dealership. You might also be able to purchase a used car warranty that would cover the cost of certain repairs.

If you buy the used car from a private individual, you will need to arrange a car loan with your bank if you do not have enough to purchase the car.

Regardless of where you buy the vehicle, ask for the Used Vehicle Information Package (UVIP). Sellers are required to provide this to the buyer. The UVIP will tell you the history of the vehicle and include things such as whether it has been in an accident or how many previous owners have owned this vehicle.

It is important for you to do your research on the used car, especially if you are buying from a private individual.

Know Your Rights

When you buy a new or used vehicle, you have certain rights under the Motor Vehicle Dealers Act.

Resources

  1. Read the article Buying a new or used vehicle: your rights.

Leasing a New Vehicle

Buying a vehicle is straightforward: you pay for the vehicle and it belongs to you. However, leasing a vehicle is more complicated. You are essentially renting the vehicle from the dealership. While you have the vehicle, you have certain responsibilities and conditions that you must meet. And while your monthly lease payments will be lower than payments on a new car, at the end of the lease agreement you don't own it.

To learn more about leasing, read the article entitled "Is leasing a car a good choice for me?"

A vehicle lease comes with conditions and responsibilities.

Photo Credit: Marc Roberts via Flickr

This is the dropbox icon. New, Used or Lease Graphic Organizers

Review your three graphic organizers for New, Used and Lease. Add any other Plus, Minus or Interesting points that you discovered in this activity.

Reflection

Based on your graphic organizers, write a brief reflection about which ownership options are best for you. Using the material you collected, give the reasons for your thinking.

Choosing a Make and Model

Now that you have some idea of the types of ownership options that might be right for you, it's time to think about the make and model of vehicles that interest you.

The factors that you should consider when selecting the type of vehicle you want should include:

  • Personal taste
  • Reputation of the make and model for reliability
  • Fuel efficiency (how far you can drive on a tank of gas)
  • Other uses for the vehicle (e.g. towing equipment or hauling things)
  • Environmental impact
  • Safety rating of the vehicle

It can seem like an impossible task to weigh all of the factors when choosing a make or model of a vehicle, but there are many sites that can help you make your decision. You can check out vehicles that you're considering using ratings from organizations like Consumer Reports and people who may also own the same car. You can check a variety of online sites such as Autotrader, Wheels.ca, Edmunds or Autos.ca.

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