Cars….Buy or Lease

Is buying or leasing the better option for you?

After you’ve looked around, checked types of vehicles, and prices, and have decided which one suits you best, how are you planning to pay for it?

Don’t forget to check out the previously owned cars, sometimes the car dealership will have their own ‘Protection Plan’.  These can be a good choice, especially if you can get a ‘Company Leased’ car, as they are gently used by a company and their clients, and can save thousands.

Leasing:  You will have to put money down, and then make payments over 2 or 3 years as specified in the agreement with the dealership.  Usually, depending on the chosen vehicle, the down-payment is a few thousand dollars, and the monthly leasing loan is a couple of hundred dollars each month until the maturity date of the lease is up.  At that time, you have the option of turning in the vehicle, but if there is any damage, you have to pay to have it fixed.  Then you can walk away, with no money in your hand, or no vehicle to drive…. but you can lease again repeating the process.  Or, you can choose to buy the car you’ve been leasing,  purchasing it at a price specified by the dealer….taking into consideration money, but not the full amount, you have been paying in the lease agreement.  A car loan would be taken out to finish paying for the car, because you are now ‘purchasing’ the car which would then be yours at the end of the loan.

Buying:  Dicker…Make your best deal.  If your Credit Score is high, you can get a lower interest rate on the loan.  Now, put an amount you’ve decided as a down-payment, the more you put down, the less the monthly payments. Take out a car loan for the balance.  Choose a length of time from 2 years – 7 years…most go with 3-5.  Check a few different lengths of time so you’re sure the monthly payment will fit easily into your monthly budget.

When the loan is paid off, the car is yours and you will receive the Title from the lender.  Until the loan is fully paid, the lender ‘owns’ the car and if you default on payments, the lender can/will repossess and sell the car. When you do receive the Title, put it in a safe place, because when you sell the car, you need the Title. It is also wise to save registration and excise tax receipts as well as any maintenance records/receipts to show a new buyer you’ve maintained the car. Of course when you sell the car, the proceeds are yours to put toward another.

**When the loan is paid off, continue writing a check for the loan amount each month, but instead, pay yourself that loan amount.  Put it into your Retirement, or one of your Savings Accounts.

In either case, whether buying or leasing, before leaving the lot, it has to be registered with the DMV, have plates, and insurance coverage.  Within 7 days it needs an inspection sticker.  You will receive an insurance policy, renewable annually.  It’s an important document, keep it safe.