How to Decide Whether to Lease or Buy a Car
Consider your trade cycle history., Estimate what you can spend on a down payment if buying, and how much you can spend per month on monthly payments., Some leases may allow you to spend less monthly than buying., Take all the payments and up front...
Step-by-Step Guide
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Step 1: Consider your trade cycle history.
Chances are you'll keep the next car about the same length of time as before.
If it's long term, 5 or more years, consider buying.
You'll generally pay less per year that way.
If, on the other hand, you like to drive the latest models, leasing may be cheaper and simpler than buying and trading every 2-3 years.
If you are going to use the vehicle as a work truck, for example and are likely to damage the vehicle, consider a commercial lease.
Your accountant can provide some tax advantage options. -
Step 2: Estimate what you can spend on a down payment if buying
Never put a down payment on a lease, just to lower the monthly payment, only the true administrative fees. , However, you will probably pay more per year on a long-term purchase, since you are paying for all depreciation.
Make sure to "Bottom Line" both. ,, It's okay to spend more either way as long as it gets you what you want. , If it's been well taken care of, you may pay less and still get many good years out of it.
Used cars also tend to be cheaper to insure. , It's often better to simply buy a car that you can actually afford.
When you trade in a car you own, you get to keep the 'equity' that you have left, and apply that as a down payment on a new car. , Make sure that mileage is figured in the lease calculation.
If you turn in a lease to the dealer he has no argument as to the value of the car or your rights to potential equity.
If the vehicle has "equity" it's yours to pocket if you choose. , Your payments would have been higher if they had known the value to be lower. , -
Step 3: and how much you can spend per month on monthly payments.
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Step 4: Some leases may allow you to spend less monthly than buying.
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Step 5: Take all the payments and up front charges and see totals before you decide.
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Step 6: options
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Step 7: and next purchase intentions should factor in your decision.
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Step 8: To save money in the long term
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Step 9: consider buying or leasing a car that's just not new.
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Step 10: Leasing allows you to have more car now than you would be able to buy for the same dollars.
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Step 11: Determine the mileage you expect to put on your car while you own it over the next 2-3 years.
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Step 12: If the average market price is less than the value of the vehicle on the lease
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Step 13: then let the lessor take it back.
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Step 14: If you're considering buying a used car
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Step 15: the warranty might be either expired or close to expiring so ask about an extended service contract.
Detailed Guide
Chances are you'll keep the next car about the same length of time as before.
If it's long term, 5 or more years, consider buying.
You'll generally pay less per year that way.
If, on the other hand, you like to drive the latest models, leasing may be cheaper and simpler than buying and trading every 2-3 years.
If you are going to use the vehicle as a work truck, for example and are likely to damage the vehicle, consider a commercial lease.
Your accountant can provide some tax advantage options.
Never put a down payment on a lease, just to lower the monthly payment, only the true administrative fees. , However, you will probably pay more per year on a long-term purchase, since you are paying for all depreciation.
Make sure to "Bottom Line" both. ,, It's okay to spend more either way as long as it gets you what you want. , If it's been well taken care of, you may pay less and still get many good years out of it.
Used cars also tend to be cheaper to insure. , It's often better to simply buy a car that you can actually afford.
When you trade in a car you own, you get to keep the 'equity' that you have left, and apply that as a down payment on a new car. , Make sure that mileage is figured in the lease calculation.
If you turn in a lease to the dealer he has no argument as to the value of the car or your rights to potential equity.
If the vehicle has "equity" it's yours to pocket if you choose. , Your payments would have been higher if they had known the value to be lower. ,
About the Author
Joan Peterson
Specializes in breaking down complex organization topics into simple steps.
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