Key Questions for First-Time Car Buyers

Purchasing a New Car With Woman Sitting in Car Taking Keys

Presented by Kris Maksimovich

Purchasing your first vehicle can be stressful, with many questions and concerns surrounding the decision. Should you buy an SUV or a sedan? Which gets the best gas mileage? Which color do you want? While questions like these are important, there’s another issue that should take top priority: buying versus leasing.

Buy new or lease?

Asking yourself the following questions may help you decide whether buying or leasing is the better option:

  • What can you afford for a down payment? A lease tends to require a smaller down payment than when you finance a purchase with a car loan.
  • How often will you want a new car? If having a new car every few years isn’t important to you, buying may be the better option.
  • How much do you plan on driving? Typical lease agreements limit the number of miles you’re allowed to put on the car.
  • How well do you treat your car? Lease agreements include stipulations on vehicle maintenance. This means that, when the lease is up, you pay for any damage or wear and tear on the car. 

Here’s a quick look at some of the advantages and disadvantages of leasing and buying:

Advantages of Buying Disadvantages of Buying
You can modify the car however you want. A large down payment is usually needed for a loan.
You’ll probably have lower insurance premiums. You may have larger monthly payments.
You end up owning the car. You’re responsible for repair costs once your warranty is up.
You can potentially keep the car for a long time. You’re responsible for selling or trading in your car.
You can drive as much as you want without incurring extra mileage costs. Cars depreciate in value over time, which funnels the liquidity out of the investment.
You can build up trade-in or resale value. Gap coverage usually isn’t included in financing agreements.
Advantages of Leasing Disadvantages of Leasing
Little or no down payment may be required. You can’t modify the car.
You may have smaller monthly payments. Your insurance premiums may be higher.
Most expensive repairs, such as installing a new transmission, don’t come into play when leasing a car. You do not own the car.
You simply bring the car back to the dealership when the lease is up. You have to find a new car immediately when the lease is up.
Gap coverage is usually included in lease agreements and can also be purchased separately. Your lease agreement may limit the number of miles you can drive.
You’re charged for any extra wear on the car, such as scratches, dents, and interior damage.


Of course, whether you finance a vehicle by leasing it or by purchasing it with a loan, you’re locked in for a specific amount of time. It’s not wise to enter into any lease or loan agreement without a stable income. Doing so can seriously hurt your credit if you default.

What about used cars?

Purchasing a used vehicle is another option, and, for many people, it may be the best choice. 

Who would benefit from choosing a used car over a new one? For the budget-conscious, buying a used car can be a great way to cut costs. Used cars may also be a good fit if you’re still getting the hang of driving, purchasing your first car, or a city driver prone to getting scratches or dings. Buying used can also reduce or eliminate your long-term payment obligations to the seller. 

Is it safe to buy a used car from an individual seller? If you’re considering buying a vehicle from someone not affiliated with a dealership, be sure to validate its price on Kelley Blue Book, as well as checking the car’s history on CARFAX. By doing your homework, you can reduce your risk of overpaying or purchasing a lemon.

Weighing your choices

Remember that no one option is inherently better than the others. It all depends on where you are in your life, what you’re looking to get out of your vehicle, and your personal financial situation. As with any major purchase, it’s always best to learn the facts and weigh all your options before making a decision.


Kris Maksimovich is a financial advisor located at Global Wealth Advisors 18170 Dallas Parkway, Suite 103, Dallas, TX 75287. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (972) 931-3818 or at

Authored by the Investment Research team at Commonwealth Financial Network.

© 2014 Commonwealth Financial Network®

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