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.
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.