To Buy Or Lease?
Several years ago, as costs of private vehicle ownership started to increase, the automotive industry experts began to examine ways to deal with these rising prices. The current lease plan is a modern alternative to owning a new vehicle. A lease has the potential to put you in a more luxurious vehicle or a vehicle with more options than you might get through conventional financing for a similar monthly payment. With a lease, your initial cash outlay is usually lower than the cash investment needed in the financing of a retail purchase.
WHAT’S THE DIFFERENCE BETWEEN BUYING AND LEASING A VEHICLE?
When you buy, you either finance or pay cash for the full value of the vehicle. When you lease, you don’t have to pay for the entire vehicle up front. You pay only for the portion of the vehicle’s worth that you will use.
LOW DOWN PAYMENTS
Of course, the more cash you come up with initially, the lower your monthly payments. Since you are only paying off the depreciation on the car – not its full value – your monthly payments are much lower than if you opt to finance the purchase of the entire car over the same period of time.
Begin a new lease arrangement. You don’t have to bother with selling the car or haggling with a dealer over trade-in value because you are upside down in your current vehicle.
QUESTIONS TO ASK YOURSELF?
HOW OFTEN DO YOU WANT A NEW CAR?
Leasing is attractive for people who want new wheels every three years or so. It saves you the hassle of selling your cars and allows you to move from car to car with relatively steady low monthly outlays and low payments.
HOW MUCH DO YOU DRIVE?
Check your odometer. It’s been keeping track of your driving habits for you. The ideal lease customer drive 15,000 miles a year and maintains a car in good condition. When your 3 or 4 years are up, just stroll into the dealer, hand over the keys. Most times a lot of the advertised leased deals assume a down payment.
PURCHASE LEASE INFO
PURCHASE – A down payment, taxes, registration, and or/other fees and charges.
LEASE – Capital cost reduction (includes first month payment) and minor fees.
PURCHASE – Drive as much as you want. But remember that mileage reduces the resale or trade-in value.
LEASE – Base mileage permitted is defined in the lease, commonly in the 12,000 -15,000 mile range.
PURCHASE – You as the owner, take the full brunt of the depreciation due to wear and tear or sales trends.
LEASE – The leasing company bears responsibility for any depreciation beyond the assessed amount.
COST EACH MONTH:
PURCHASE – High payments due to the interest on a loan for the entire value of the vehicle, plus associated fees.
LEASE – Usually lower, based on a monthly lease rate, depreciating value, and state/local taxes and fees.
PURCHASE – You are responsible for all upkeep. A car in good condition has a higher re-sale or trade-in value.
LEASE – You are only responsible for normal maintenance.
I look back on the many cars and trucks I have bought and have to say the best deal was on the lease of a 2010 Chevrolet for 3 years/3600 miles. The lease down payment was my GM card earning ($1100 down) and $199.00 per month for 36 months. Even though the car had less than 25,000 miles when turned in, it was the cheapest car to run for the 3 years. Gas and oil changes were the only expenses and insurance.
In today’s car market it was nice not having to trade it. New cars are the worst investment you will ever have. I know because I had 49. “My love for cars and trucks has no reason.”
-W. Callihan, Charleston, SC