WAREHAM, Mass. — As tax refunds start coming in, car dealers will get busy ushering in the unofficial start of the car-buying season. Wareham resident Rise Lundblad purchased a new 2022 Kia Sportage, a major upgrade.
“Now I have an old Saturn, 2005,” she said. “I planned to drive it until the wheels fell off, and my mechanic just gave me a two-week notice.”
Once she found the car she wanted, the next question was buying vs. leasing.
“I wasn’t really in for the leasing part of it because the costs of cars are going up so fast,” Lundblad said. “To me, to lease the car, you’re going to be paying for it for three years, then you’re going to buy it out and not knowing what the price would be in three years if we’re going to be out of this whole pandemic thing or be like paying for it twice. So I just decided to bite the bullet and buy a new one.”
It’s almost impossible to make an apples-to-apples comparison. The length of terms, rebates, how often you drive, dealer fees, maintenance costs, & interest rates are just a few of several factors to analyze that could sway the decision. Now with the pandemic, there’s another big factor.
“The chip shortages have caused assembly lines to produce fewer vehicles than they normally would,” said Nathan Hecht, CEO of the online car shop Rodo.
Fewer cars produced means anything new you find will cost more. That leads to more people buying used and those prices also getting inflated.
There are record breaking numbers in the used car market. Used car listing prices in January went up 40% from the same month last year, according to Carfax. The used car company says the average listing price for a used car is now a record $28,000. Hecht says those inflated numbers sway his decision.
Boston 25 asked Hecht if at some point, is it more cost-effective to buy or lease a car.
“It’s not necessarily actually the case,” said Hecht. “As long as you are getting the maximum rebates and incentives that you can for the car, and you’re keeping your due at signing, and your monthly lease payment as low as possible, you will ultimately generally do better in lease versus finance. Especially in today’s market where you’re buying a vehicle at a somewhat inflated price.”
Still, whether you’re buying or leasing, there are ways to save money.
Hecht says shop around for the best deal, consider ordering your car from the manufacturer to avoid dealer add-ons, and consider trading in the purchased or leased car you have now to take advantage of the inflated prices.
“Most consumers are unaware that leased vehicles today have a ton of equity in them,” said Hecht. “Over time, that equity is going to decrease as the market normalizes.”
One more tip, he adds, be flexible.
“I was looking at one and decided on it, but by the time we got inside, it was gone,” said Lundblad. “So I grabbed the next one down the line. It doesn’t have all the features I want, but it’s a basic car. It’s going to get me where I need to go, and in this day and age, you can’t be too fussy; it’s supply and demand.”
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