Lease Or Buy A Car-Which Choice Is Best

Lease Or Buy A Car-Which Choice Is Best

I hate buying a car. No matter how many numbers I have in my brain or papers I have in my briefcase, it turns out the same way every time. Eventually, I stumble out of the car dealership, dizzy, confused, and broke.

So I decided to forget to look at the cars. At least for now. I want to know the smartest financing route. Not for the car salesman or Lenny down the block, but for ME. And for the first time, I'm considering leasing a vehicle.

The very thought of it makes me a little nervous. In my family, it is the accepted opinion that "only bigwigs and people who think they're something they're not" drive leased cars. I'm not sure which group that puts me in, but I'm leaning toward leasing my next vehicle. It just seems easier, and after the year I've had, I'm ready for easy.

Buying vs. Leasing---Is One Any Better Than the Other?

BUYING

Payment Upfront

Cash--- Full price at the time of purchase

Down Payment---Plus monthly payments

Registration, Taxes, Fees

Monthly Cost

Monthly payments usually end up higher than on a leased vehicle.

Vehicle Return

When you've decided to get a different vehicle, you will have to trade your car in or sell it.

Early Termination

Whenever you wish to, you can trade-in or sell your vehicle. If there's a loan balance, use money from the sale to pay it off.

Term End

* No more payments

* Equity which helps to pay for the next vehicle you buy

Depreciation

Your vehicle's value will go down. But whatever it's worth is yours.

Mileage

Go as far as you like. It's yours.

Can I Customize

Some customizations can cause your warranty to be voided, so you want to check it. Otherwise, you are free to customize/modify your vehicle as you please.

Should I Worry About "Wear and Tear"

With a purchased vehicle, your main concern here is resale/trade-in value. Excessive wear and tear could bring down that value. Other than that, there are no worries.

LEASING

How does it differ from purchasing

Payment Upfront

* Acquisition Fee---Sometimes referred to as a bank fee. Often it's added to the price of the vehicle.

* Disposition Fee---Pays for a clean up and/or sale of the vehicle after you bring it back.

* Security Deposit---Will be refunded when you return the vehicle unless you go over the mileage limit or the company discovers excessive wear and tear. If you've rented from the same company before, or your credit is good, the security deposit is often negotiable.

* License fees, Documentation Fee, Title, Tag, and Registration Fees

* Sales Tax

* Down Payment---You will be charged a sales tax on your down payment, but it will lower your monthly payments a bit.

* First Month's Payment

Monthly Cost

Nearly always lower than when purchasing.

Vehicle Return

You pay "end-of-lease" costs when you return your vehicle, then leave.

Early Termination

Ending the lease early can be expensive. Sometimes as expensive as going full term with the contract.

Depreciation

How much a leased vehicle will be worth in the future won't affect you at all. Of course, the equity won't affect you, either.

Mileage

There is a limit, usually between 12,000 & 15,000 miles.

Can I Customize

No. If you do, you will have to remove it before returning the vehicle. If there is damage, you must pay or arrange for insurance to pay.

Should I Worry About "Wear and Tear"

Yes. If you go over what the car company considers ordinary wear and tear, you will be paying for it.

FAQ:

You say to drive a purchased vehicle as many miles as I wish. Does the mileage affect resale value?

 You must weigh possible future resale value against present mileage requirements.

When leasing a vehicle, is a down payment always required?

No. Many agreements don't require a down payment when you lease a vehicle...