Buying a vehicle is not only a big decision it's a lot of money. Maybe you should think about leasing; here are five great reasons to consider it.
Lower monthly payments - Because you are not purchasing the vehicle, only paying for the time that you use it, monthly payments can be 30-60% lower than if you bought.
More car for your money - On the same principal as above, you are only paying for the amount that you use the car. This means that you can 'borrow' a car that you would not normally be able to purchase.
New cars more often - Lease terms generally run between two and four years, this means that you can opt for a different vehicle at the end of your lease.
Lower tax responsibility - In most states and Canada, you are only taxed the portion of the vehicle that you are 'borrowing.' Not only this, but the tax is wrapped into your monthly payments so you are not hit all at once.
Fewer maintenance hassles - If you get a lease that covers the same time as the manufacturer's warranty, most, if not all, repairs will be covered, which means less of a hassle for you.
In recent years the popularity of leasing has skyrocketed. This is not surprising when you see commercials for the car you have been thinking about buying and the monthly lease payment is almost half of the monthly payment if you bought. But, don’t let the lower payments lure you into thinking that’s all there is.
Leasing is not terribly complicated, yet many do not understand it. In short, a lease is like renting a car for a period of time with the added option to buy at the end of the lease. The reason that the payments are so much lower than buying is that you are only paying for the car for the time that you use it.
For example, you are looking at a car that you could buy for $22,000. If you decided to lease that car for 3 years, the dealer would tell you that at the end of those three years the car would be worth $11,000. From this, the dealer would take the difference between the original cost, $22,000, and the residual value, $11,000, plus finance charges to determine your monthly lease payment. The monthly payments for a loan, if you bought, are higher because you take on the entire cost of the car, $22,000.
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Leasing Advantages
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Leasing Disadvantages
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Buying Advantages
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Buying Disadvantages
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Lease if:
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Finance/Buy if:
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And, if you are still just concerned with money...
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The basic concept of leasing is explained succinctly by www.leaseguide.com
"When you buy, you pay for the entire cost of a vehicle, regardless of how many miles you drive it...When you lease, you pay for only a portion of the vehicle's cost, which is the part that you "use up" during the time you're driving it."
In other words, you're paying primarily for the depreciation on the car. At the end of the lease, you either turn the car back over to the leasing company or purchase it for a pre-determined amount.
One method is not always better than the other. It depends not only on the terms, but also on your own preferences and personal habits. If having a new vehicle every two or three years is important to you, leasing may make sense.
If you can't afford the car payment without a sizeable down payment but you don't have a sizeable down payment, leasing may make sense.
If lower long-term costs are important to you, buying may make sense.
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1. Short-term costs of leasing are always lower than short-term costs of buying. The long-term costs of leasing are always higher than the long-term costs of buying, assuming that you keep the car you purchase outright for a number of years after your loan is paid off. |
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2. If you lease for the length of the manufacturer's warranty, you'll never have to pay for major repairs |
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3. You can lease without a down payment, although making one will lower your payments |
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4. Terminating a lease before it's up can be extremely costly. |
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5. Since you don't own a leased car, you can't change it, paint it, or add equipment to it. |
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6. Sign only closed-end leases, which means that if at the end of the lease, the car is worth less than the leasing company estimated when you signed your lease, they, not you, absorb this cost. Read the fine print of the proposed lease and make sure you understand all the terms. |
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7. Putting more miles on the car than the lease allows can cost you big money, since you'll pay so much per mile for every mile driven over the allowance. |
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8. Negotiate the lowest capitalized cost or lease price of the vehicle you'll be leasing because your payments are based on this cost. A good lease will offer you a price below the Manufacturer's Suggested Retail price. |
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9. The best cars to lease are those with the best book value after the term of the lease. Since they depreciate less, you pay less. You can look up lease ratings to see which cars retain their value better and will therefore give you the best lease deal. Stay away from cars, which depreciate quickly unless you’re willing to pay more, and can afford to do so. |
Car Lease Example:
You lease a $25,000 vehicle for two years. At the end of the two years, the vehicle's value is estimated to be $15,000. Your payments over the life of the lease will total $10,000 (the difference between the $25,000 purchase price and the $15,000 value at the end of the lease), plus finance charges to compensate the leasing company for the money they have invested in the car, plus fees.
Are you ready to Lease your next car?
What if the salesman tries to bamboozle you with talk of "cap cost reduction" and "money factors"?
Will your eyes glaze over in reaction to this double-talk?
Or will you know what he is really saying?
You can confirm your level of preparedness by taking the Edmunds.com leasing quiz by visiting: www.edmunds.com
If you have your eye on a new car but don't have the money, or if you have the money but are a little more conscientious of it, buying a certified pre-owned car might be a good option. What began as a way to move older cars with lower miles has grown into a very popular option that many car manufacturers are pursuing.
Certification requirements are set by the car manufacturer, which results in differences between programs. However, they have the following in common.
Some offer
What about certified pre-owned?
Certified pre-owned vehicles are a great option for many people. Instead of dealing with the high rate of depreciation you can get a newer car at a used car price. Not only do you get a used car price you get a car that has been inspected for any problems and a warranty if something goes wrong. And if that's not enough, many dealerships are offering incentives to buy certified pre-owned. Basically, it's a great deal any way you look at it.
Before You Buy a Certified Pre-Owned
Before you go running off to buy a certified pre-owned car consider a few things.
Generally, you will not want a plan that has a deductible higher than $100 per visit.
Q. What if I change my mind about the car after I buy it?
A. Basically, you are out of luck. Once you have signed a contract, the car is yours and the dealer does not have to take it back. There is no "cooling off" period that many believe.
Q. What if I buy a lemon?
A. Please check on your States Laws. Everyone knows what a lemon is, a nice way of saying piece of junk, but what if you bought one? Fortunately, you are not necessarily stuck with the car. Though lemon laws differ from state to state, every state has one. Still you must meet the following requirements: You must have bought the car from a dealer The car must not be what the dealer promised Lemon laws enable a consumer to return a defective car if certain criteria are met. Sometimes these are rather stringent requirements because car manufacturers don't like to take back a car. While there are laws to protect you, you will most likely have to go to court. There are three instances that you should check into your state's lemon laws. They are: if the car keeps breaking down within the warranty period, if the car is a safety hazard, or if the dealer is unable to fix the car while it is warranted.
Information is taken from Edmunds.com Please verify for the latest deals and incentives as this information may no longer be accurate and should be used for information only.
Since rebate and incentive programs change often, you should always check with your local dealership for incentives and rebates, which may not be listed here. You can also go to Edmunds.com
NOTE: Manufacturers do not always update their dealers with the new rebates immediately upon expiration of previous rebates since they often wait to see what the competition is offering.