(new here) Is buying used & selling used ever better than leasing?

Ask the Hackrs
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Hi Everyone,

This is my first post here, so, hi everyone!! I hope I’m not too far off-base asking this question. I’ve been searching and reading posts for a few hours on leasing, best leases, etc. I keep coming back to this one question:

Is buying a used car, 2-3 years old w/ low mileage, from a private party and selling the car two years later private party better than leasing a new car for the same amount of time? (Assuming we drive 12k a year, and keep the vehicle in excellent condition)

My background: My wife and I are from Georgia and started leasing cars when Georgia had the great EV program going where we could lease a Nissan Leaf and literally get paid to drive the vehicle (after accounting for the cost in gas, etc). After that, we leased a Nissan Rogue SL … which we’ve liked, but we’re ready to reduce our costs. Our upcoming lease ends in late October - my plan is to extend this month-to-month through December so that we can take advantage of the best sales/leases in November/December timeframe.

My main goal for the next two years is to reduce costs while waiting for more reasonably priced EV vehicles to hit the market with further range in Georgia (it looks like Georgia won’t be getting the Kona EV this Fall, and the dealers seem to want quite a chunk of change to lease a Chevy Bolt). So, in an effort to save money in the meantime, I just keep debating between buying used / selling used two years later vs leasing something relatively inexpensive (like the gas Hyundai Kona SEL … we have to stay in the crossover-to-SUV size due to needing space for equipment I use for my job … unfortunately, this means the Chevy Volt is out, the leaf was just large enough to work in cargo-space … but, I’m not in a rush to have that range anxiety again).

I’d really appreciate your input on this. I am new to this forum and still reading up on everything. Of course, I will do my best in December to negotiate a lease on a Bolt, but I’m not holding my breath. So short of that - buy used & sell used two years later, or lease? I’m purely looking for what will cost us the lesser amount overall. I’m happy to put $10k-$20k into a used car if I am relatively sure I’ll get back out of it $8k - $16k two years later. But, I haven’t purchased or sold a vehicle in years, and I’ve never bought used and sold two years later - so, I have no clue if this is even something that people do / can work to the buyer’s advantage.

Thank you ahead of time!!

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I’ve done this multiple times. With the right cars it can be a good strategy.

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It depends…

Some models lease well and are good candidates to use for 3 years and turn in.

Some depreciate rapidly and you can get a decent value used and not lose too much being 2nd owner.

Selling vehicles, especially more expensive ones, is a challenge that some people do not want the hassle of.

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Depends which car you get. If you get one that still depreciates fast or is unreliable, it could be more expensive. Plus, you’d be paying sales tax on the entire price each time you purchase the used car.

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Of course. Buying/leases cars is very complicated and very situational. There are many circumstances where it makes more sense to buy used rather than lease.

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Max_g - thanks. Would you mind sharing which cars are the right cars to do this? It’d be my first time attempting this. Or, what to look for overall. I just assume low-mileage, clean, etc … but, I am assuming.

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The primary advantage of leasing is you can get a new car (with warranty) with a shorter commitment than fully financing the whole vehicle value. You also have the flexibility of being able to hand back the car or buy at the end of the lease. You’re paying the depreciation on the car though, plus finance costs.

If you’re looking for the most car for your money and happy to perhaps not have full warranty cover for the period of ownership, you’re better buying used so someone else has taken the depreciation hit. It also gives you flexibility that you’re less likely to lose money if you want to trade cars in 6/12/whatever months time.

If you’re looking at EV’s, you can get nearly new BMW i3s for ~$20k (you didn’t mention the range you needed, perhaps i3 ReX). Or you can keep checking for deals up until your lease end as that’s a few months where there will be lots of deals during that period, some will buy you out of your lease as well if you’re within a certain number of your lease ending so you might not need to time the handover so carefully.

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@ajgraham thanks. For electric, I’m looking for a range of 200+ realistic miles with AC running. We had several run-ins when we had the Leaf where we just needed more mileage, though we really did enjoy driving an electric vehicle (for the lower noise and the inexpensive fuel/electricity). Basically, right now, most days we only drive 4-10 miles, but some days we need to drive 150+ round-trip.

I’m starting to think it really comes out to nearly even either way - inexpensive lease vs buy used/sell used.

Maybe my best bet is to just wait until I’m in the November / December timeframe and see what deals are offered and what used cars are for sale … and not overthink it (like I’m doing now) beforehand. I’m the kind of person that likes to be as prepared as possible so that I can be ready to jump on a deal the second I see it. So, I tend to research and find every bit of predictable information I can.

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Look at PHEV vehicles to eliminate range anxiety. Some of the older ones should depreciate more fully when EVs with 200 mile range are commonplace. Ford Cmax energi would work if you routinely drive 10 miles, youd be on EV the whole time and then have the ICE for longer trips.

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Yeah that range reduces the number of EVs suitable for you. I think you’re right about planning ahead but also like you said don’t over think it as you’ll have lots of options even if you only start looking properly ~3 months before lease end. Nearer the time keep checking here to see what cars are best value at that point, while also comparing to see what’s out there on the used market.

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@cheapdad00 thanks! I hadn’t ever heard of the Ford Cmax energi - looking into it now. :slight_smile:

Btw, to everyone - first, thank you. Secondly, I am all-ears to any and all suggestions. What types of vehicles to consider, lease vs buy, etc. We’re in a financial position where either is viable to us, but I am also extremely thrifty and try to save anywhere I can.

I probably should have said this earlier, but we do own our own business. I’m not 100% sure what’s happening for deductions on next year’s taxes, but it is something to factor in. We drive the car for business ~90% of the time.

Edit: Wow! This Ford Cmax energi may actually be a perfect fit for us! I can’t believe I hadn’t come across it at all in my research before. I’ll have to see what deals people have gotten in the past in regards to leases for it. I’ll also google around and see if I can’t find any SUV PHEV’s.

Edit #2: I found PHEV SUV’s … wow, they are expensive. The KIA might be affordable. Still looking into everything, but fun to have different options.

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It was discontinued last year, so not sure if you can still find any brand new. If there are some, leasing programs probably ended anyways Maybe better luck with purchasing if you want it.

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My suggestion would be to find a 3 yr old one for under 15k. I leased one for 2 yrs in 2013 and it was the perfect fit for me. 10 mile commute to work, free charging at work. Got it up to >200 mpg before I took a long trip to eat up some miles. The hatchback offered much easier ingress/egress than the fusion.

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Just signed up and this is the first thread I saw when I did a search for used and even though it’s a few months old I can resist adding a reply…

My reaction to the question is “are you kidding?” However anyone can assert a bunch of specific assumptions about the situation to support any answer on this kind of question.

The big question is what do you mean by “BEST” (a common issue with many people asking questions like this.)

So for my answer, I’m going to assume BEST = BEST VALUE = GETTING THE MOST FOR YOUR MONEY.

So the simple answer is NO. The main reason is depreciation is not linear. A new car (whether purchased or leased) depreciates the most at the beginning and the least at the end of its useful life. Purchasing a used, but newer car (< 30K miles) that is still on warranty is ALWAYS going to give you a FAR better VALUE than leasing a brand new car, especially if it’s Certified Pre-Owned. I challenge anyone (given the under <30K mileage and still on warranty assumption) to provide any logical argument to assert the opposite.

Sad to say, and I know this statement may rub some people the wrong way in a forum that is centered around leasing… In most – I didn’t say ALL cases leases are used so people can drive more expensive cars than they could otherwise afford to buy because the payments are lower. That’s the simple truth in the majority of cases. The other reason in addition to that is people don’t know how or don’t want to sell their used car themselves so it’s simpler to just turn the car back in. There are many other reasons (corporate fleet lease, etc.) but they are not the case of the majority of leased cars driving down the road. You would be surprised how many $50K BMW drivers are leasing their car with a payment that is 1/3 of what they are renting their 2-bedroom apartment for. They really want to drive a luxury car. And that’s fine. Not a wide financial decision IMHO but that’s their choice.

One advantage though to a lease is that, it you have a lesser lost cost of opportunity on your money. Let me explain. I’ll dummy it down for simplicity sake. Let’s say to buy the car it will cost you $40K over 3 years but to lease it, it will cost you $20K over 3 years. So during the lease you could be investing the other $20K (lump sum or portion of your payments) to invest in/pay for other things that the car. At the end of the lease THEN you can decide if it’s a wise decision to buy the car or let it go.

I leased only one time in my life an Acura TL-S mainly to make my self-employed tax accounting simpler AND by studying used car values (and since I work from home and put little mileage on it) I estimated the car would be worth more than the buy-out price at the end of the lease. That situation is pretty rare though. But at the end of the lease I bought the car and 3 days after I had the title in hand I sold it for a $2,700 profit.

I’d say in 99% of cases if your objective is to get the best value, buy used Certified Pre-Owned with warranty left on it or used private party with warranty left on it instead of brand new. Leasing, in general, you are paying extra to drive that brand new car. If that’s really important to you, then maybe it is money well spent?

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I should make it clear, if you are for sure trading in the car after three years, then the lease CAN sometimes be the cheaper way to go. Here’s an example where the lease is better.

https://www.cartelligent.com/blog/buy-vs-lease-mazda-cx-5

This only works if the fair market value (or trade-in value + tax savings) is less than $20,945. They are assuming a $31,605 car depreciated to $17,500 trade in, in 3 years. If your tax rate was 8% you’d save 8%, so the net trade-in value is $18,900, still below $20,945. I think their trade estimate is low, and it would be closer to being a wash between purchase and leasing except for the lost cost of opportunity on the money for the purchasing route.

Most people won’t take the time to do this analysis. They will basically look at it as, I’d rather pay la lower payment because I can’t afford the higher payments to purchase and I don’t want to drive a cheaper car. The dealer knows this which is why it’s rare that a lease will actually save you money compared to buying.

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Not really sure why you joined this forum if you are so opposed to leasing cars and think it’s a terrible value. Kinda like an atheist joining an evangelical forum. If you think everyone should buy a used Honda Civic you will find people who argee with you at R/personalfinance (incidentally one of my family’s car is a 2008 Honda Civic).

To counter one of your points, I was a proponent of buying for a long time to get max value. However, I think there is something to be said for some of the amazing lease deals people got this spring on small GM SUVs. We are talking 100-175 a month for GMs small SUVs. That ends up being about 5k-6k over three years or 3k-4k over two years. I don’t think buying used achieves any better numbers. You can buying a used Corolla or Accord that will be reliable but will cost a lot upfront or a less reliable car with more repair costs. However once you factor in payments, maintenance time value of money and value of time (going to get car repaired takes a lot of time), I just don’t see how buying a used car puts you that much ahead.

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I may try this approach with an Audi CPO…the more expensive models typically lease poorly and the CPO warranty gets you to 6yrs/100k miles (from initial delivery date). Found a 2017 Audi S8 Plus (CPO), originally $131k, now at $85.7k. Not sure how much more room there is on price (can always press them to throw in maintenance). See https://www.bieneraudi.com/certified/Audi/2017-Audi-S8-1e151d720a0e0a6b381719009c39936a.htm . Interesting that the Gross Vehicle weight shows as 6,041 lbs …qualifies for Section 179 depreciation if used 50% or more for business.

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Assuming you make all the correct choices when you buy used or lease new, E.G. Apples to apples, the only real difference is going to be the headache at the end.

If you lease, you will go through the return process which is a slight pain, costs money, and takes time. On the other side, you will spend time and money prepping your used car to sell, and will deal with private parties on a large financial transaction. <-- this is never comfortable. I had a guy show up with 21K in cash, in a 7-Eleven bag.

Unless bad luck befalls in some way, the money piece will be negligible on either side between a super cheap lease, and selling a 5 year old car.

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This misconception is a sticky one. Many serial lease fans, such as myself, could afford to buy pretty much any car they’d like (let’s say under $100k, which is way outside the average transaction).

However, selling a car that’s 3 years old and has a value around $30k is hard–people shopping in that price range want the warm fuzzy of a long warranty and a dealer to help with problems down the road, if they occur.

I also don’t want a car under my care that is one day outside of warranty. I’m not interested in paying for repairs of any sort. Hell, I don’t even want to replace tires.

All of these conveniences have a value, and that value is wrapped up in the constant, unending payments of leasing.

Did you lease your TL so you could drive more car than you could have otherwise afforded? Or were you one of the very few exceptions?

Value is a very situational thing, hard to apply any one-size-fits-all metric that includes the words ALWAYS, and FAR BETTER. Value, like beauty, is in the eye of the one doing the measuring.

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As has been mentioned earlier, value is in the eye of the beholder. Depending upon the vehicle you choose, reselling it after 2-3 years has some challenges, especially if you want to maximize value and sell privately.

I recommend every chance I can that people must “do the math” every single time, lease vs buy new vs buy used. However, for this forum of professional lease hackers, who are prone to value the deal over being locked into a specific vehicle, it doesnt pertain as much. The best lease deals are on vehicles where the manufacturer is propping up leasing, either through enhanced RV, lower MF or generous incentives. These factors, especially the propped up RV, make vehicle candidates you probably wouldn’t buy new, because of increased depreciation.

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