Lease or Buy – Questions to ask before you get your next car
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Maybe that trusty old pick-up is on its last mile or the realization has finally sunk in that no matter how hard you try, another car seat just won’t fit into the back seat. It’s time for a new car. There are a lot of questions that go into the hunt for that next vehicle. Make/model? New or used? Color? Another big question is how you want to purchase that vehicle. This is no cookie cutter answer! Here are some things to consider when getting a car.
Is ‘owning’ important to you?
When you buy a car, it’s yours. When you lease a vehicle, it’s like renting. Your payment allows use of the car, but you don’t own it and must return the vehicle when your contract is up. Many leases have the option of being able to payout the remainder of the lease if you’d like to keep the vehicle.
How much can you afford in monthly payments?
Lease payments are usually lower than loan payments, because you are paying for the vehicle’s depreciation plus interest, taxes, and fees. Loan payments are usually higher because you pay off the entire purchase price plus the interest, taxes, and fees. One thing to also consider is that auto insurance may be higher for leased vehicles.
Do you need flexibility?
When you buy a car, it’s yours to do with what you want. You can change it to match your style, sell it when you’d like, etc. With a lease, any customization would have to be removed and if you need to end a contract early, it can include high fees. However, another benefit of a lease is being able to be trade it in for a new car every couple of years.
Will you be traveling?
When you purchase a car, it’s yours to travel in as you wish. Most leases limit the number of miles you drive, 12,000 to 15,000 per year. If you plan on traveling more than that, you’d need to pay extra or negotiate at the beginning of your contract.
Still running the numbers? Use the auto calculator to figure out details like monthly payments, how much you should put down, what different loan terms look like and more.