Posts Tagged ‘buying a car’
Buying or Leasing?
This is one classic scenario that haunts ever car consumer out there: Pay cash upfront or settle for monthly payments? Will you be buying or leasing for a new set of wheels?
As is the case with every other common dilemma, there is no slam-dunk answer. Each option has its own benefits and drawbacks, and it all depends
First, check your finances. It is important that you are able to afford the vehicle. Ask yourself, how stable your job is and how healthy you are financially. The short term monthly cost of leasing is definitely lower than making monthly payments on buying: you essentially pay only the portion of the car that you use up upon the time that you actually drive it.
If you have a lot of cash up front, then you can opt to pay the down payment, sales taxes – in cash or rolled into a loan – and the interest rate determined by your loan company. Buying effectively gives you ownership of the car and that feeling of “free driving” that goes on providing transportation.
If, say, you want to get into luxury models but can’t afford the upfront cash of purchasing the vehicle than you’re a good candidate for leasing.
payments will result in stiff financial penalties and can ruin your credit. You need to make sure you carve out the monthly lease payment in your budget for the foreseeable future, at least for the duration of the lease.
Besides the financial aspect, making a buy or lease decision depends on your own particular lifestyle choices and preferences. Think about what the
If you want to drive a car for more than five years, negotiate carefully and buy the car you like. If, on the other hand, you don’t like the idea of ownership and prefer to drive a new car every two to three years then you should lease.
Next, take into consideration your transportation needs: How many miles do you drive per year? How well do you drive and maintain your vehicles? If your answer becomes: “I drive 40,000 miles a year and I don’t really care much about my cars as I don’t mind dealing with repair bills,” you are better off buying a vehicle.
Leasing is based on the assumption of limited-mileage, usually no more than 12,000 to 15,000 miles a year, and wear-and-tear considerations.
Unless you can keep within the prescribed mileage limits and keep the car in a good condition at the end of your lease, you might incurhefty end-of-lease costs.
Financing A New Car
Getting a new car always involves calls. Pay cash or finance? Buy or lease your new car?
There’s no wrong or right answer. Cash upfront, financing, and leasing all have advantages and downsides. As is the case with every other common quandary, there is no slam-dunk answer. Ultimately it comes down to private preference and a group of basic fiscal concerns.
First, affordability is obviously key. How how stable is your job? How good are your finances? If cash flow is a concern then leasing with its short term standard payments is a great option. With a lease, monthly costs are seriously lower than payments when buying. After all , with a lease you only pay for a fragment of the car’s cost — the part used up during the time you drive it.
purchasing an auto with cash is a choice of course. Or you could decide to make a huge downpayment and still lease of finance. You could choose to pay the down the payment or sales taxes and fees. Otherwise all of these extras are rolled into the loan.
With any type of financing the interest rate is set by the bank and lendor. It pays to window shop for a good rate. Infrequently the dealer has special financing but many times your local bank is the best chance.
Suppose you would like to get into luxury models but can’t afford the upfront money to buy the car. If you’ve a good job and credit you’re potentially a good candidate for leasing. Unlike buying, leasing gives you the option of not needing to fork out the down-payment up front. And the interest rate will be like what you would pay if you bought the car but you will only be financing a fraction ofthe total car costs.
Leasing does have its risks though. Terminating a lease early or defaulting on your monthly lease payments includes stiff fiscal penalties. Your credit could be ruined. As with any loan or financing, you need to make sure you carve out the monthly lease payment in your financial position for the obvious future, at least for the period of the lease.
Besides the financial aspect, making a buy or lease decision depends on your own particular life-style decisions and preferences. Think about what the auto means to you : are you the type of person to bond with the vehicle or would you rather have the fun of something new? If you’d like to drive a car for at least 5s years, negotiate carefully and buy the auto you like. If, on the other hand, you don’t like the idea of ownership and prefer to drive a new auto every 2 to 3 years then you must lease. Next, factor your transportation wishes : How many miles do you drive a year? How properly do you maintain your cars? If you answer is : “I drive forty thousand miles a year and I don’t really care much about my cars as I don’t mind working with fix bills”, then you are likely better off buying. Leasing relies on the presumption of limited-mileage, generally less than 12,000 to fifteen thousand miles a year, and wear-and-tear considerations. Unless you can keep in the prescribed mileage boundaries and keep the car in a good condition at the end of your lease, you could suffer wide end-of-lease costs.
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Should You Buy Or Lease Your New Car?
In the past, we’ve looked at the “buy versus lease” equation from the perspective of a relatively healthy economy. In a robust economic environment, there are more benefits to purchasing a vehicle than leasing one. The only exception is the inability to drive a new car, truck, or SUV every two or three years. Because of the thoroughly ravaged economy, it is worth taking another look at the comparison.
In this article, we'll approach the issue by first revisiting how the leasing process works. I'll describe the key factors that influence which deal is more appropriate during this sluggish economy. I’ll also explain a few of the dynamics that have changed in the industry over the past year.
How The Process Works
The negotiations for a lease are similar to those when purchasing a vehicle. You and the dealership have to agree on a the price after you choose the model you want. This price is referred to as the capitalized cost. Much like your monthly payments on the purchase of a car are based upon a financing interest rate, your monthly lease payments are based upon a money factor. Incidentally, dealerships often try to obfuscate the money factor in the same way they obfuscate the interest rate. That should imply the importance of negotiating this factor upfront.
In addition to the purchase price, you and the dealer will agree upon a residual value. This is the value of the leased vehicle at the time you return it to the dealership. Many factors can be negotiated, such as the annual mileage caps, maintenance requirements, turn-in fees, and other terms of the lease agreement.
Does Today’s Turbulent Economy Change Things?
The question is whether it makes more sense to choose a leasing arrangement over buying a car outright given the current recession. Indeed, the industry has gone through significant changes over the past couple of years. Credit markets have tightened, which has made it far more difficult for consumers to qualify for auto loans. Automakers and dealerships have responded by expanding their lease portfolios.
For a certain type of prospective car buyer, leasing arrangements are more attractive than ever. Not only are dealers more willing to offer better terms, but buyers who may want to get rid of their vehicles after a few years can simply turn them back into the dealership. They won’t be forced to unload their vehicles on a soft market.
The Frugal Driver - Better Off Driving
Even given the advantageous leasing terms offered by dealerships, most frugal drivers will be better off buying their vehicles outright. Once depreciation has been removed, the cost of occasional repairs and the replacement of worn parts is far lower than a perpetual string of monthly payments.
The lease industry has become more attractive for the buyer that places a high value on driving a new car every few years. For most drivers, buying and maintaining the same car for its driving life is far less expensive.
How To Select the Best Car For Your Family
When you chose your first car, you probably looked first at things like how cool the car was and how much you would love to drive it. Then you looked at the price, and finally you picked what you could afford and tried to source the best model in that price range.
Picking the correct car for the family isn’t so different from choosing that very first car. Sure, you have probably bought several cars. And yes, you could now have a slightly bigger budget. But let’s face it, you need to buy the best car for your family, with the money you have available.
The first thing to think about when buying a car is its main use. If this will be the “second car” and not everyone in the familly will normally ride in it, the car may not need to be as big or be equipped with many family oriented features.
Second, who’s going to drive the car the most? The main driver should find the car comfortable, and that includes how the car drives, how the seats feel, where the controls are located, how they are built and whether the mirrors and controls are adjustable to suit the main driver’s requirements.
The next thing to think about is not what many people think of, but it is equally important. You need to check that the trunk has a large opening and that it’s sizeable enough for your requirements. Some cars with big trunks will not take large boxes in the trunk because the opening isn’t wide or tall enough.
You also need to think about how many doors you need. If more than two people usually ride in the car, four doors are practically necessary, especially as kids grow. It can become a real annoyance getting people in and out of the back of a car with only two doors.
How roomy the seats are goes along with the number of doors, but be sure that the there’s enough room for adults as well as kids. while your kids might be small now you want to make sure that as they grow, there is room for everyone in the car without scrunching.
Mileage is also a consideration, as many smaller cars that get good mileage may in fact be too small for your family. However, as many car companies are starting to concentrate more on mileage, you may find a nice van or sedan that will suit your family and get better mileage than your old car.
In the end, picking a car is a very personal decision that you and your family should take together. The foremost thing is that you ought to feel that you have bought a car within your means, that both you and your family can be comfortable in and that will give you with years of service.
After all, buying a car is a very long-term commitment, and you should be happy with your selection for the life of the car. Simply taking the time to examine your options and think about what you really need allows you to enjoy your car long after that new-car aroma fades away.