Today, 1 in 6 drivers in the United States is over sixty-five, a significant increase from twenty or thirty years ago. Driving allows seniors to maintain their mobility and independence. With the average life expectancy continuing to increase, it should come as no surprise that the older population is making up a large percentage of active drivers. In fact, 68% of drivers over the age of eighty-five report driving five or more days per week. It’s likely, then, that you or a loved one will have to consider making a car purchase after retirement.
Choosing to buy a new car or pre-owned car, or to lease a car instead, is a multi-layered decision, especially for those who are retired and living on a fixed income. You’ll have to consider what your priorities are and how they fit into your retirement plan.
Buying a Pre-Owned Car
- Monthly payments for a pre-owned car are typically lower than they are for a new car.
- You’ll likely save on insurance because you may not need to pay for comprehensive coverage.
- A pre-owned car has already depreciated.
Buying a New Car
- With a new car, you may save on overall maintenance.
- You won’t have to worry about how many miles you’re putting on the car, as you would with a lease agreement or an older pre-owned car.
- Buying a new car allows you to choose the exact car that you’re looking for and customize it to your liking.
Leasing a Car
- Leasing means that you can get a current model year vehicle with updated safety features.
- A monthly lease payment, on average, is lower than a car loan payment.
- Leased cars come with warranty protection, either bumper-to-bumper or powertrain.
Regardless, consider the following tips to ensure you’re getting the most out of your money and your vehicle:
- If possible, pay cash for your pre-owned or new car. You’ll save money that you’d otherwise be putting towards interest on a loan.
- Choose a car that is durable and built to last in to avoid making another purchase in several years.
- Perform routine maintenance on your car to keep it in tip-top shape and running for years to come. This is just as important for leased vehicles because you’ll often be charged additional fees if your car is returned with excessive wear and tear. Be sure to check your lease agreement.
Whether you decide to purchase or lease a car, be sure to consider all options along with your personal finances and retirement plan. If you’re having difficulty coming to a decision, use an auto loan calculator to get started and discuss your concerns with a financial planner.