We all know that new cars are expensive and that translates to sizable monthly payments.  No wonder that the lower payment you get when you lease a car has made leasing so popular.  Rather than just looking at the monthly payment, though, the question really is: which financial approach best meets your needs? There are often many details that aren’t immediately obvious when consider whether to lease vs buy a car or truck.  

Leasing


Let’s look at leasing first.  Lower monthly payments and less money down can make leasing seem like a great deal.  What’s not to like? The truth, however, is that leasing offers a lot of convenience, but only if you are willing to put up with some limitations.  Many leases, for example, include lower annual mileage limits – often only 12,000 miles per year and most leases require you to take diligent care of the vehicle (lots of trips to the dealer for checkups).  Make sure the sum total of the restrictions required by the leasing company work for you.  The biggest issue may be the annual mileage limits for many drivers.

Another issue is what happens when the lease term expires. When the lease is up, you will typically be offered a price that you can buy the vehicle for.  Be sure to pay close attention to this “end-of-lease purchase price” and any additional fees that may occur.  Some leasing companies do not state what the end-of-lease purchase price is and this is cause for concern. It may be higher than what you expect.  

Leasing Conclusion: You are a good candidate for leasing if you prefer to have a new car every few years and put limited miles on your car every year.  Leases are also great for those that can write off the use of a car for business use.

Buying

We all know what buying a car means -you take complete ownership of the car.  May people prefer this but before considering the purchase of a new car, calculate what it is going to cost you every month.  The total cost. Start with the monthly loan payment and add on other monthly car expenses.  When you have things totaled up, make sure that the total amount doesn’t put a strain on your other household expenses.

By the way, you should shop around when looking for a car loan. There are many places to get one these days. You can obtain online financing too. You may be able to arrange for pre-approval of a loan from your credit union. When you do some of these things, you may not have a specific vehicle in mind, just a general price range, and when you make the deal you write the dealership a check for the total amount. Some institutions will give you a lower interest rate if you have direct deposit and an electronic loan payment, so be sure to ask about it.

And remember!

Remember to check for incentives on your vehicle of choice. From zero percent financing to customer-cash rebates, manufacturers are constantly competing for your business by making their vehicles and financing more affordable.

Source: Chuck Patterson Dodge

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