Youve come to the end of your lease and you like you car enough you want to keep it in the driveway. Just like buying a used car, there is some research to be done to nail a good deal.
First, you need to know the cost of buying out your lease. Read the fine print of your contract and look for the purchase option price. This price is set by the leasing company and usually comprises the residual value of the car at the end of the lease plus a purchase-option fee ranging from $300 to $500. When you signed on the dotted line, your monthly payments were calculated as the difference between the vehicles sticker price and its estimated value at the end of the lease, plus a monthly financing fee. This estimated price of the car value at the end of the lease is what is termed in leasing jargon residual value. It is the expected depreciation or loss in value of the vehicle over the scheduled-lease period. For example, a car with a sticker price of $40,000 and a 50% residual percentage will have an estimated $20,000 value at lease end.
Now that you know the cost of buying out your lease, you need to determine the actual value, also termed market value, of your vehicle. So, how much does your car retail for in the market? To pin down a good, solid estimate you need to do some pricing research. Check the price of the vehicle, with similar mileage and condition, with different dealers. Use online pricing websites, such as Cars.com, Edmunds.com and Kelly Blue Book for detailed pricing information. Gleaning pricing information from various sources should give you a fair estimate of your vehicles retail value. All you have to do now is compare the two amounts. If the residual value is lower than the actual retail value, than youre into a winner. Unfortunately, there is a good chance a car coming off a lease is a little on the high side. Dont despair though. Leasing companies know as much that residual values on their vehicles are greater than their market value and as such are always on the look out for offers. You can knock down on the price of your leased vehicle with some smooth negotiating tactics. Put forward a price that is below your actual target and negotiate hard until you wind up near that figure.
Tags: Buying A Used Car, Car Value, Depreciation, Despair, Dotted Line, Edmunds, Good Chance, Jargon, Kelly Blue Book, Lease Period, Leasing Companies, Leasing Company, Mileage, Option Fee, Option Price, Purchase Option, Residual Value, Residual Values, Retail Value, Sticker PriceRelated posts
Buy A Used Car: 3 Reasons To Say In With The Old
Why you should buy a used car. You know it is time to buy a replacement for your vehicle. Repair bills are looming on the horizon or eating into your checking account. Every time you turn around something seems to be going wrong — both large and small annoyances make driving an ongoing hassle. Once you have made the decision to go car shopping, the first question you must face is whether to go new or used. Here are three reasons you should buy a used car.
The top reason to buy a used car is that new cars are a losing proposition. New cars depreciate fast. Did you know that as soon as you drive a new car off a dealer lot it will instantly depreciate between $1,000-$2,000. After the first three years most cars are worth only about 60-70 percent of their original value. However if you buy an used car then you will have to pay a lot less for a nice car and you will not have to worry about that depreciation.
Once upon a time buying an used car was a risky proposition. There was a good chance you could buy a lemon or a car that had been used and abused or even been in an accident. Today the savvy consumer does not have to face these risks which leads to the second reason for buying an used car. It is safer (and less risky) than it has ever been before. Many reputable dealers offer one-owner vehicles that are still on warranty so that takes some risk out of the equation, but in addition today there are many research tools available on the internet to help you learn about the reputation and performance history for the particular vehicle model you are considering plus you can even run the vehicle identification numbers to determine if a specific vehicle has been in an accident. It is probably a lot less risky to buy an used car than a new unproven vehicle that might turn out to be a lemon. You can also get a pretty accurate value for a vehicle so you know how much you should pay.
Finally, buying an used car takes a lot of the stress out of new car ownership while still letting you enjoy the benefits of a new vehicle. Dealers will give a vehicle a turnout so it will have that new car smell, but because you do not have to worry about the price you paid you can sit back and enjoy your new-to-you vehicle without worrying about tempting fate. Plus, many dealers have more room to deal on an used car than they often do with a new car so you have more bargaining power.
So if you are looking to buy a car then you should consider buying an used car because it will save you money, it is safer than ever before, and it is less stressful.
Tags: Accurate Value, Annoyances, Checking Account, Depreciation, Good Chance, Hassle, Horizon, Losing Proposition, New Car, New Cars, Owner Vehicles, Performance History, Repair Bills, Reputable Dealers, Reputation, Research Tools, Risky Proposition, Savvy Consumer, Vehicle Identification Numbers, Vehicle ModelRelated posts
It’s expensive buying a car and it only gets more so as time goes on. Over time, the price of new cars has increased faster than the rate of inflation. This isn’t entirely due to greed on the part of automakers; cars are also more complicated and useful than they used to be. Sure, they were cheaper in the 1960’s, but they didn’t include air conditioning, air bags and video systems. Convenience and safety comes at a price.
With the increase in price comes an increase in the length of time people are taking to pay off their cars. Few people pay cash; most people take out loans and pay over time. The average car loan, which used to be repaid over a period of three years, now averages about six years in duration. That’s a long time to pay for a car, especially if you have no plans to own it for that long.
Taking six years to pay for a car has its advantages, as the payments are lower than they would be over a shorter loan term. Such a long loan does have a significant disadvantage, though – you can find yourself in a negative equity, or “upside down”, situation. This can be a serious problem – if you should total the car in an accident, your insurance company will only pay you the value of the car, and not the amount you still owe.
A buyer is described as being upside down when he or she owes more on a car loan than the car is worth. It’s easy to find yourself in an upside situation, and it can occur under any of the following circumstances:
Insufficient down payment – Cars depreciate as much as 25% the minute you drive them off of the lot. If you haven’t provided enough of a down payment to cover that depreciation, you may find yourself upside down immediately.
Trading in too often – Buyers like to trade cars in and roll their outstanding balance into a new loan. These unpaid debts can contribute to negative equity.
Too long a loan – Five and six year loans often lead to negative equity. You can often avoid it by keeping the length of loans to three years or less.
In order to avoid a potential problem in the event of an accident, you should contact your insurance provider to make sure that you have “gap insurance.” Gap insurance will make sure that you are protected should you have an accident while in an upside down situation. Without gap insurance, you may find yourself still making car payments even though you no longer have a car. That is the last thing any car owner wants.
Tags: Air Bags, Air Conditioning, Automakers, Car Loan, Circumstances, Convenience, Depreciation, Duration, Greed, Insurance Company, Length Of Time, Loan Term, Loans, Long Time, Negative Equity, New Cars, Rate Of Inflation, Six Years, Unpaid Debts, Video SystemsRelated posts
Buying A Used Car In Australia – Two Factors You Must Consider Carefully Before Buying A Used Car
If you are going to buy a used or second hand car, what will be your main concerns? What are the most important factors to consider if you wish to buy a used car?
I find myself asking these same type of questions when I was faced with a limited budget and a need to change to a newer, but used or second hand car to cut down on initial investment costs.
I have read from one car club for motoring enthusiasists that it should be the age of the car. Briefly, this car club recommended that I spend the most time to look out for a car that was about 3 years old to get the best value out of a used car which still looks good and has depreciation factored into it.
But essentially was that the main factor I should be concerned about when hunting for a good used second hand car?
Are there more important factors I should rightly spend more time to look at if I am looking for a used or second hand car?
Indeed, I was not too surprised when I read a report from the Monash University Traffic Research Centre and supported by the RACV, Traffic Accident Centre and several other motoring clubs that for anyone looking for a used car, the most important criteria in determining the selection of a used car is not its age, but is the safety the used car provides the driver and the people on the road!
In the world’s largest crash study conducted in 2006 (and updated recently in mid July 2007), results assessed the performance of 305 vehicle models in more than 1.7 million crashes in Australia and New Zealand from 1987 to 2004.
From the study, it is now possible to have a good understanding of how each car model correlated to its age would perform with regards to its crashworthiness (how much protection the vehicle provides the driver in a crash) and aggressivity (how badly the vehicle is likely to harm other road users, including pedestrians and cyclists, in a crash).
By means of this study, if you are looking for a used car in Australia and New Zealand, it will be possible for you to have a general assessment of the protection the used car model will provide you as well as the potential harm it can cause to other road users in a crash.
Dr Newman who led the study reported that of the 305 vehicle models assessed, 87 provided an above average level of driver protection and 72 provided a below average level of driver protection in a crash.
With this report, it is now possible for you to check the make of your car and the model against the report to have a quick understanding of its car crashworthiness and aggressivity.
Further if you are in Australia and if you agree that the aspect of car safety is or paramount importance to you, then before you make a decision to buy any used car, check the make of your car and the model against this Used Car Safety Ratings (UCSR) report.
From this report there are clear indications of some superior makes and models that are standout cars, and where safety is your consideration, it will be wise to give a lot more consideration to these cars when you purchase your next used car.
Tags: Australia And New Zealand, Buying A Used Car, Car Club, Car Model, Crashes, Crashworthiness, Cyclists, Depreciation, Good Understanding, Important Factors, Initial Investment, Investment Costs, Monash University, Motoring Clubs, Pedestrians, Road Users, Second Hand Car, Traffic Accident, Traffic Research Centre, Vehicle ModelsRelated posts
Each year, out of all the vehicles bought in the U.S., 41 million are used cars compared to only 16 million new car purchases.
Since purchasing a car is the next financial investment made by US citizen other than housing, it is important to determine if buying a used car is worth your money.
1) CONS – Here is a list of the disadvantages of used-car buying:
* The options of cars are limited, so the search for the right vehicle could be lengthy.
* The buyers have no idea if the car was treated. Used cars usually have worn consumables such as hoses, tires, shocks, filters, fans and clutch.
* Although used car dealers provide a warranty, it is only limited to a couple of months unlike purchasing a new car with full warranty. Certain maintenance on your purchased second-hand car could be more expensive.
* Purchasing a second-hand vehicle would offer you a lower trade-in value.
* The main disadvantage of purchasing old cars is that it has an unknown quantity. Whether the dealer has worked the vehicle to make it attractive for the test drive, the buyers are still unaware of the repair bills, economical issues, and its reliable transportation.
* It is difficult to negotiate fair financing terms on an older vehicle.
2) PROS – On the other side, buying a used car could benefit the buyer in several ways:
* The original owner of the car received the depreciation hit. The market value of the new car decreases from year to year. An average 30% of its value within three years from the time it was bought, so buying their car would save you a lot of money.
* Unlike purchasing a new vehicle with high insurance fees, you will receive a lower cost of insurance if you choose to buy second-hand cars.
* Although buying new and used cars both provide loans, lease, or money-saving the majority of dealers who sell used cars often have shorter loan terms.
* If your investment is decided based on appearance and gas mileage, choosing a used car would guarantee the value and reliability it has provided over the years.
* A used car would provide your dollar more flexibility. Compared from buying a new car that would eat all your finances, buying a second-hand car would allow you to purchase other accessories such as air conditioning that would cost approximately US$200 to $900 extra.
Buying your used car could waste your money if you fail to do your research, compare dealerships, and be aware of the cars market value. Be a wise used-car buyer.
Tags: Buying A Used Car, Buying Used Cars, Car Purchases, Depreciation, Economical Issues, Financial Investment, Gas Mileage, Hoses, Insurance Fees, Loan Terms, Old Cars, Pros And Cons, Purchasing A Car, Purchasing A New Car, Repair Bills, Second Hand Car, Second Hand Cars, Several Ways, Unknown Quantity, Worth Your MoneyRelated posts
Whether to buy a new car or buy a used car is often times the first decision that needs to be arrived at before you can actively begin perusing purchasing your next vehicle.
Lets take a look at some tips, pros, and cons when it comes to making this decision.
First of all, having been in the automotive business for many years, I almost always lean toward finding a good used car that fits what I am looking for. For me, I believe that used cars offer the best value for your dollar. In most cases, youll find used car departments are much more used to and willing to negotiate the price that they have posted on the car. From a negotiating standpoint, most used cars wont have all of those superfluous dealer add-ons stuck on the window either that will just never do.
In the automotive market, used cars will most certainly come with a lower initial price tag than a comparably equipped new car. And not only will the price be lower, you may also find that so is your cost to insure the used car as well as the tags, and taxes. Depreciation being what it is; means that with a car a couple of years old, the biggest depreciation hit has already occurred. And from a tangible perspective, you may have a better chance of getting those upgrades youd like to have on the used car that you couldnt otherwise afford going with the new.
Yet, with all of this, buying a used car isnt for everyone. Finding a used vehicle that fits ones entire car buying criteria can be a tough exercise in balancing what you want with the value versus risk inherent when it comes to used cars.
Not so many years ago, reliability was a major concern when purchasing a used car and rightfully so. Today however, reliability problems are a fraction of what they used to be. Todays vehicles, when properly maintained will easily go for 100,000 miles and its not uncommon for vehicles to be motoring along as they approach 200,000 miles or more. And with all of the information now available online, the risk factor is again reduced even a bit more.
Even though more reliable today, buying a used car for people means buying a car that is probably out of its original bumper to bumper warranty. This alone, is enough to repel many potential car buyers back to the new car side of the dealership.
As you know, if you are looking at buying a used car, you are probably looking at a car that is outside the factory warranty or at least would have very little remaining. With no warranty youll be on the hook to pay for any needed repairs out of your own pocket. However, the biggest expense for most all cars today are the things that arent covered by any manufacturers warranty anyway; items such as brakes, tires, alignment, batteries, etc.
Of course nobody can guarantee that you wont encounter a lemon. No matter what the make and model, no manufacturer can produce a vehicle that can withstand years of neglect and/or abuse. Always, always, always give the used car a thorough inspection both by yourself and a qualified mechanic; doing this will catch most problems that may be looming on the horizon.
When it comes to financing the purchase of a used car, you find that the going interest rates will typically be higher than new car rates. This is definitely a piece of the puzzle youll want to check out. There is no rule of thumb as to what the difference in the interest rate will be between the two because there are just too many determining variables involved such as; the economy, rebates and incentives involved on the new car side, your credit, length of financing, and even the type of used car youre looking at. Be sure to crunch the numbers for both sides.
With used cars, insurance can save you some money as well because youll typically pay less for your insurance on a like model from a few years past. The reason is simple; less cost of replacement for the insurance company and used cars are generally not high on the stolen lists.
And finally, (the latest) safety features could be a concern if youre looking at used car (particularly if youre going back a few model years).
All in all, if the touch, feel, and smell of a new car, isnt a top priority for you, I think youll find that a well thought out used car purchase you can get more car and features and still be within your budget.
Tags: Automotive Market, Better Chance, Buying A Second Hand Car, Buying A Used Car, Car Buying, Cars, Depreciation, Exercise, Fraction, Initial Price, New Car, Perspective, Price Tag, Pros And Cons, Purchasing A Used Car, Reliability Problems, Risk Factor, Second Hand Car, Standpoint, Todays Vehicles