Newsletter
Lease vs buy
Have you ever noticed that you seem to recognize car commercials more
when you are in the market to want or need a new vehicle? Many people
will tell you that you should buy, while others say that leasing is the
way to go. The good news is that they are both right. Whether you should
buy or lease is ultimately up to you. We will look at both sides and you
can then determine if you should buy or lease.
Leasing is basically the use of the vehicle over a contractual period,
while you are making monthly payments on it. There is no ownership included.
At the end of the lease you do have some options. You either turn the
car and keys in, you can buy the vehicle for the residual value (stated
in the lease contract), or you can lease another vehicle.
When you purchase a vehicle you are making monthly payments in pursuit
of owning the vehicle out-right. You either finance a loan through a bank
or dealership, or you pay for it all together with the money you have
saved.
One leasing benefit is that the monthly payments are generally smaller
and require little, if any type of down payment. Most leases last for
2-3 years, and you don’t have to worry about selling the vehicle after
the contract term. This also gives you an opportunity to get into another
new vehicle and lease.
Be careful though, most leases restrict the amount of miles you can put
on the vehicle during the lease. Going over the contract miles can cause
charges when the vehicle is returned. You can calculate the estimated
miles you put on a vehicle per year. Find out how far you travel to and
from work, to the store, or any family trips where the miles would add
up. If you find out that you put a lot of miles on your vehicle each year
you may not want to lease.
Consider your personality. Can you live with the factory stereo, or do
you need a six-disc CD changer with surround speakers and a sub-woofer.
Do you need a ski or luggage rack, or love the collection of ski resort
stickers that usually plaster your bumper? If you like to personalize
your vehicle than you will definitely want to consider purchasing a vehicle,
as most leases will not allow you to make any personal changes to the
cars appearance or features.
Do you know your way around the gears and belts of a car? Or, do you take
your car into the shop and describe what is wrong by making funny imitating
noises? By leasing a vehicle you have the benefit of having the vehicle
under warranty and can take it in to get repaired. If you can fix minor
problems or recognize big ones and do not mind repairs, than the purchase
of a vehicle could suit you. Remember, whether leasing or buying, regular
scheduled maintenance (changing the oil, replacing the air filter, or
rotating tires) is important to the value of the vehicle. If you lease
a vehicle and do not take proper care of it, you can be charged for the
abuse.
If in the past you have bought a car, and as soon as it was paid for you
were looking into another new vehicle, you may want to consider leasing.
It is generally the same idea and you will be able to do so with a lower
monthly payment. However if you buy a vehicle and drive it for around
ten years, than leasing may not appeal to you.
If you choose to try and get out of a lease contract early, you will be
able to, but you will probably incur heavy fees. It is good to make sure
that the vehicle you choose will suit your needs for the length of the
contract. For example, if you are looking into starting a family in the
next couple of years, you may not want to lease a small two-door sports
car if in a year you are going to need a larger or safer vehicle for your
family.
If you decide to lease or buy your next vehicle it’s important to do your
homework. Research a variety of cars, and shop around different dealerships.
If you feel pressure from a salesman you can always leave. Ask for help
and advice from friends or family members who have purchased or leased
a vehicle recently. Bring someone you know who is good with a salesperson.
Spend as much time on it as you need to feel 100% comfortable. When you
finally choose the right vehicle and terms, make sure to read every word
of the contract and ask questions about anything you don’t understand.
The more information you know beforehand, the more equipped you are to
get the better deal and you will feel more comfortable.
So the next time you see that car commercial and your in the market for
that car or truck, do your homework and determine if you a buyer or leaser.
Remember, it’s all up to you.
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