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Is it a good idea to buy the car after the lease is over?

Posted by Wilmar, Inc.

Is it a good idea to buy the car after the lease

Yes! It can be a great idea. If you're in the market for a used vehicle, or even a new vehicle, you should consider buying a car after the lease is over. They're far more cost-effective, and they've been well maintained.

Why Some People Never Buy New Vehicles: Depreciation

We've touched on this elsewhere in our blogs, too. The moment a brand-new vehicle drives off the lot, it becomes a used vehicle. At that exact moment, while you're driving home in a thrilling new car, you're also taking a huge financial hit. 

  • Depending on the value of that car, truck or van, depreciation can be tens of thousands of dollars.

Depreciation is a complex topic in the world of cars and trucks. Some makes and models (particularly European cars and exotics) experience significant drops in value as they age.

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Savvy car buyers know the initial rush of owning a brand-new car will wear off after a few payments, and they're left throwing money into a pool of depreciation. You're making payments — plus interest — on a vehicle that's worth less than you owe. That's the number one reason why so many people choose to buy well-maintained off-fleet vehicles when the lease is over. 

Another attraction of off-fleet vehicles is a low price point.

Off-Fleet Vehicles Are More Affordable to Buy and Tag  

No matter how you slice it, a well-maintained off-fleet car will cost less than a new car. The purchase price is lower, so the sales tax is less. And, depending on your state, it may cost significantly less to tag a used vehicle. 

  • Here in North Carolina, it costs around $40 to tag a private car or pickup truck.
  • Things work a bit differently in California, and the average consumer can plan on spending $200 to $500 every year to tag a new vehicle.
  • The rates drop as a vehicle ages, so it will be much cheaper to tag a car that's a few years old.

Whether you're a consumer looking for a commuter car, or a small business thinking about your fleet's costs, registrations add up fast!

Lastly, let's talk about new cars' need for GAP insurance versus a car you buy after the lease is over.

Insurance Issues: No GAP Needed

A 2020 Ford Raptor base model costs upwards of $53,000. Add some sales tax, tags, and so on, you'll need a loan closer to $60,000. Insurance companies know they'll be on the hook to pay for a vehicle if it's stolen or wrecked, but they'll only cover the depreciated value of the truck itself, not the sales tax or tags.

  • So it makes sense to buy GAP insurance from a dealer when purchasing a new vehicle.
  • A month from now, you'll owe $60,000 on a used Raptor worth $40,000.
  • If you wreck that Raptor (it happens), you'll be on the hook to pay the $20,000 difference to the bank. 

But used fleet vehicles won't experience that huge depreciation drop in the first month. Insurers will charge less to insure them — because of the lower price — and you won't need to buy and GAP. 

Are Off-Lease Vehicles Right For Everyone?

We think so! It's hard to imagine any person or organization who wants to spend extra money — a lot of it — just because they have it on hand. Aside from the initial new car rush, or a display of wealth, there's very little that can be achieved by a brand-new vehicle that an off-lease car or truck cannot do. 

Contact us today to learn more about our off-lease cars, trucks and vans. We're ready to tell you about our philosophy and give you more reasons why it's a good idea to buy the car after the lease is over. 

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Topics: Fleet Financing, Vehicle Leasing, Misc


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