ALT-1 Lease or Buy Car Leasing Versus Car Buying Explained
Are you saying to yourself, "The vehicle I have isn't cutting it anymore, I need a new one." But what are your options? First of all, most think that there are only two. You can either lease it or buy it. Before you make any decisions, you should definitely know what you are getting yourself into.
The first question you need to ask yourself is "How often do I want to get a new car?' Do you want to keep the car for many years to come or do you want something that you can use and then get something different within the next two years or so?
If you don't plan on keeping a car for more than two years, buying is not the way to go. When you buy a vehicle and have that loan on your back for the next six years, you will most likely owe more on the loan than what the car is worth, therefore you will lose money when you decide to trade it in, financing that new car for more than what it is worth. However, if you have it in your mind that you want to trade out every so often, leasing is the way to go. You use the car, pay your payment, which most of the time lease payments are less than paying the bank their payment, and when you don't want it anymore, as long as the lease has ended, you move on to the next vehicle.
If you plan on keeping that car, then buying might be the option for you. When buying, you have a plethora of options when it comes to choosing a finance company. The options are endless. This would most likely be the hardest decision when it comes to buying a vehicle, other than choosing the vehicle. Hardest you ask? Well, when choosing the right finance company it is sometimes not always about the rate, nor the monthly payments. Choosing the right one can sometimes be difficult because you don't want to do business with a company that doesn't necessarily meet your needs as a person. You also have to do your research on the finance company as well as the vehicle. One thing that you have to remember when purchase a vehicle, is that your payments don't always cover the depreciation. Most cars, from the time that they arrive at the dealers' lot, will depreciate by almost 400 dollars a month. Sometimes it doesn't seem like a wise investment, but unfortunately with cars that is what happens. But, that car will never be worth less than a certain amount. That amount is established by what dealers will be willing to pay for it at the auction.
But when choosing to purchase versus finance, this is not the only thing that you have to keep in mind. There are so many things to think about.
Take mileage for instance. When you purchase a vehicle your mileage doesn't matter. However, when you lease, it does. For the term of a lease, you are only allowed to drive so much. Once your go over that specified amount of mileage, you have to pay for it. If you know that you drive more than the specified amount in the lease, compute the cost overrun. If the mileage doesn't make sense for the cost that you are paying for it, then leasing might not be for you.Whether you choose to lease or buy, maintenance has to happen. However, you are set buy a list of rules when you lease. If the lease calls for you to bring that car in for its regular oil change you have to, whether or not you have the time and to a certain facility. However, when you buy, you still have to have that maintenance performed but it is up to you when and where. Whether you are two days or two weeks overdue, you are not held to a contract.Okay, so what if you decided to lease versus buying and you decided that you want to keep that car. Well, it is going to cost you. Your payments that you have made to them have not done anything really to make the price of that car less. You paid for use and nothing more. SO when you want to purchase that same car, expect to pay a lot more than what you would pay for the same thing off the street or even at a dealer.
There are many things to consider when deciding to lease or buy. Grab a copy of the lease, bring it home and do your calculations. Make sure that it makes sense to you and that the money spent makes sense. Read all the fine print. Make sure that you have left nothing unturned. Compare your overall costs. Whether you want a no strings attached approach to using a car or just want to buy one and not have to worry about anything than making your payments, you still have many things to calculate and ponder. Make sure it makes sense to you no matter what you chose, after all you are the one paying for it.
