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Buying versus Leasing A Car
If you are considering whether to buy or perhaps lease your next
car and which would afford you the best deal, most consumer
experts agree that from a purely financial aspect you will be
better off in buying your next car.
Of course paying cash in full is the best possible scenario
since with this option you would avoid any type of finance
charge. But for the vast majority of us and for the scope of
this article we'll take a look those purchases or leases that
involve financing.
In the short term leasing may look attractive to you because
monthly lease payments will more than likely be less than the
monthly payments of a purchase agreement. Why? Because with a
lease you are essentially only paying for the part of the car
you are going to use. It's kind of like splitting the cost of a
pizza with someone. You are only paying for the pieces that you
are going to eat. In car terminology the part that is left over
in a lease is called the residual value of the car. The higher
the residual value of the car the less of the car you will use
during the lease so you payments for the part that you do use
(the lease) will be lower.
Typically lease durations are 24, 36, or 48 months. Do not sign
up for a lease beyond 48 months. Actually anything beyond 36
months is pushing the value of the lease. Don't let the car
salesman get you into a longer lease just because they make your
monthly payments look more attractive. Remember time costs you
money and the car's residual value will plummet and you loose
all the advantages of leasing and still be left with nothing in
the end.
For some drivers the car buying decision isn't based purely on
bottom line numbers. And this is fine. It's strictly personal.
Leasing does afford you the ability to always be driving a new
car. A car that is within a few years of the latest body style
and technology. A car that is always under the factory warranty.
For the person that has accepted the fact that they enjoy being
in a newer car and that car payments is just another monthly
expense, then why not get the most car for the money? Then
leasing could be a good alternative.
If this is your personal preference the other two questions you
must answer are how many miles a year do I drive and how hard on
cars am I? The mileage question can really come back to haunt
you if you are not careful. People who are in new cars and thus
enjoy driving them and showing them off more will have a
tendency to drive them more. Be very careful with you mileage.
Going over your allotted mileage on your lease could end up
costing anywhere from 15 to 30 cents per mile beyond the lease
mileage allowance and this can get painful in a hurry. In most
leases you can purchase additional mileage up front at the time
of the lease but keep in mind if at the end of your lease you
haven't used all of your miles, you don't get that money
refunded back to you.
I mentioned a bit earlier you need to consider how well you
treat your cars. Only you will know this and you need to be
honest with this one. Don't think that you can turn your lease
car in at the end of the lease with the car in sub par
condition. If you do, you may be assessed reconditioning fees
that could become rather hefty.
In summary, from a purely financial perspective buying your next
new car is the best over the long haul. But, with car ownership,
so much personal preference, and personal priorities come into
play. If you think leases look attractive, be absolutely certain
about your mileage you will drive. Take good care of the car.
And finally check with your insurance agent first to make sure
that you don't give back the money you save in monthly payments
to your insurance company.
About the author:
Jeff Neilan worked for many years in the automotive industry as
a salesman, finance manager, new and used car manager, and
general sales manager. With Jeff's working knowledge of car
dealerships, car sales, and financing you'll find his articles
on getting your best car deal insightful and rewarding when
purchasing your next car. Please visit
http://www.acarbuyersguide.com for more of Jeff's articles.
Written by: Jeff Neilan
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