If you are considering whether to buy or perhaps lease your next car and which would afford you the best deal, most consumer experts agree that from a purely financial aspect you will be better off in buying your next car.
Of course paying cash in full is the best possible scenario since with this option you would avoid any type of finance charge. But for the vast majority of us and for the scope of this article well take a look those purchases or leases that involve financing.
In the short term leasing may look attractive to you because monthly lease payments will more than likely be less than the monthly payments of a purchase agreement. Why? Because with a lease you are essentially only paying for the part of the car you are going to use. Its kind of like splitting the cost of a pizza with someone. You are only paying for the pieces that you are going to eat. In car terminology the part that is left over in a lease is called the residual value of the car. The higher the residual value of the car the less of the car you will use during the lease so you payments for the part that you do use (the lease) will be lower.
Typically lease durations are 24, 36, or 48 months. Do not sign up for a lease beyond 48 months. Actually anything beyond 36 months is pushing the value of the lease. Dont let the car salesman get you into a longer lease just because they make your monthly payments look more attractive. Remember time costs you money and the cars residual value will plummet and you loose all the advantages of leasing and still be left with nothing in the end.
For some drivers the car buying decision isnt based purely on bottom line numbers. And this is fine. Its strictly personal. Leasing does afford you the ability to always be driving a new car. A car that is within a few years of the latest body style and technology. A car that is always under the factory warranty. For the person that has accepted the fact that they enjoy being in a newer car and that car payments is just another monthly expense, then why not get the most car for the money? Then leasing could be a good alternative.
If this is your personal preference the other two questions you must answer are how many miles a year do I drive and how hard on cars am I? The mileage question can really come back to haunt you if you are not careful. People who are in new cars and thus enjoy driving them and showing them off more will have a tendency to drive them more. Be very careful with you mileage. Going over your allotted mileage on your lease could end up costing anywhere from 15 to 30 cents per mile beyond the lease mileage allowance and this can get painful in a hurry. In most leases you can purchase additional mileage up front at the time of the lease but keep in mind if at the end of your lease you havent used all of your miles, you dont get that money refunded back to you.
I mentioned a bit earlier you need to consider how well you treat your cars. Only you will know this and you need to be honest with this one. Dont think that you can turn your lease car in at the end of the lease with the car in sub par condition. If you do, you may be assessed reconditioning fees that could become rather hefty.
In summary, from a purely financial perspective buying your next new car is the best over the long haul. But, car with car ownership, so much personal preference, and personal priorities come into play. If you think leases look attractive, be absolutely certain about your mileage you will drive. Take good care of the car. And finally check with your insurance agent first to make sure that you dont give back the money you save in monthly payments to your insurance company.
Tags: Body Style, Bottom Line, Buying Versus Leasing A Car, Car Buying, Car Payments, Car Salesman, Factory Warranty, Finance Charge, Financial Aspect, Lease Payments, Leases, Leasing A Car, Line Numbers, New Car, Personal Leasing, Pizza, Purchase Agreement, Residual Value, Short Term Leasing, Time CostsRelated posts
There is nothing quite like the feeling of buying a brand new car. Most people have a few clunkers, and maybe a lemon or two as their first few cars, while they save up for a decent down payment for their dream car. Nowadays however, with every major car company allowing people to lease a vehicle rather than buying it, saving up for a down payment is not as necessary as it used to be.
Leasing dropped into the car scene a few years ago and has been viewed as a life saver to many would be car owners. When you think about it, what person wouldnt choose to pay $175 or $250 a month for a car instead of $350 or $500? Leasing prices are much lower than monthly payments, no matter how big your down payment is! Some companies offer leasing packages that almost sound too good to be true. However, they usually are too good to be true!
If you are looking to buy a new car but you are dragging your feet about paying a high monthly payment, the leasing option is probably starting to look really good to you. If you do your research however, you will ultimately find that buying your car is almost always the smartest thing to do. I would say that the only exception to this is if you have moved somewhere for a short period of time for your job, or for schooling and you need a car. In these cases, leasing would be a smart thing to do, as long as you are not planning any long road trips.
When you enter into a leasing agreement, you are basically borrowing a car from a company, with the understanding that if anything should happen to the car, you are 100% liable, and you will have to pay any damages. When you buy a car, the same applies, but when you own your car, you dont have to give it back after putting your money into it! You also get the added benefit of trading it in for another new car when the time comes.
When you lease your car, the lease agreement is usually for four to five years, after which you will have the option to give it back (once the car company has made absolutely sure it is coming back with no scratches or dents!) or to pay the remaining thousands cash down so you can own the car. Although the monthly payment for leasing a car is lower, it is still cheaper and better in the long run to purchase the car and pay a higher monthly payment.
If you own your car, you make the rules, you decide if a dent or scratch really does need fixing and if it does, you can decide where you want to get it fixed. You can also drive as far as you like in a year, and not worry about paying for your mileage. Leasing agreements usually give you 20,000 kilometers or miles per year an you will pay a lot extra to be able to drive more in a year.
Tags: Added Benefit, Brand New Car, Car Company, Car Owners, Car Scene, Cars, Damages, Dream Car, Job, Lease Agreement, Leasing A Car, Leasing Agreement, Leasing Car, Leasing Option, Leasing Packages, Leasing Prices, People, Period Of Time, Road Trips, Short PeriodRelated posts
Buying a car needs not just investment but deep thought. The market is overflowing with choices and temptations. Buyers need to think, what kind of car and can I afford it?
Think, what do I need transportation for right now and what will I need two years from now? Do I want a car as a status symbol or as something that makes my life easier? Will the car be a commuter vehicle, or to transport children? Would a van with cargo space and high clearance be more suitable for a growing family? Should the car be a two-wheel or four-wheel drive? What kind of terrain will I be driving in most of the time? Go through auto magazines as well as consumer reports to get a clear picture of the world of cars.
1.Work on your finances and determine what you need to spend each month on transportation. A car should not cost more than 10% of your net pay per month. If it is more, then consider leasing a car instead of buying one.
2.Before you finalize anything, find out what the target price is. Four figure discounts are available with almost every make.
3.Never sign an arbitration clause or blank financial forms. Try and get finance from a separate source, a bank or financial institution.
4.Haggling will get you a good deal apart from shopping around for finance. The market is competitive be sure to check dealer fianc, high street, internet lenders, as well as other options.
5.Try and ensure a large down payment thereby reducing the loan to be paid. Work out your finances and choice of car such that the term of loan is for the shortest period.
6.Find out what buying incentives are on offer. These vary from audio systems to cash back offers, and 0% financing. Ask what extras and add ons will cost in addition to the price of the car.
7.Be sure to evaluate your old car independently if you are considering a trade in. Pay attention to cost to change, the difference between what the new car costs and what the old one is worth.
8.Find out about warranties, taxes, and insurance. These can eat into your budget.
9.Vet the contract well. Read the fine print. Make sure that paying off the loan before time will not carry any penalty.
10.Check out at least 3-4 dealers to gauge what the best offer is.
Test drive the vehicle before you finalize the deal and go through the car booklet page by page to understand all that the manufacturer needs to tell you. Be clear what is under warranty and what is not.
Never choose vehicle based on a picture or dream. It is not how you look in the car thats important but how well the car will fulfill your needs. Be practical and sensible; do not buy a model because the dealership is offering a holiday for two or a low interest scheme. Identify a vehicle that suits your needs before subjecting yourself to an onslaught of marketing.
Tags: Arbitration Clause, Auto Magazines, Car Buyer, Car Costs, Cargo Space, Commuter Vehicle, Consumer Reports, Financial Institution, Four Wheel Drive, Growing Family, Incentives, Internet Lenders, Leasing A Car, New Car, Pay Attention, Status Symbol, Street Internet, Target Price, Temptations, Warranties