Should You Buy Or Lease A Car? 5 Questions To Ask

November 17, 2017

It might not always seem black and white when it comes to deciding whether to buy or to lease a car. There are pros and cons to each, but there are some things to think about that may have you leaning more in one direction. It also helps to calculate your potential savings to see which makes more sense. When deciding, ask yourself these 5 questions, which should help.

How do you feel about your overall monthly costs?

As long as you lease, you’re renting the car, so you will have a monthly payment. A few things about that:

If the thought of always having a payment bothers you because you’re looking for ways to minimize your monthly expenses, you may want to buy a car rather than lease. If you really want to get a big bang for your buck, consider buying one that’s a couple years old with low mileage. Here are some ideas to get the best deal when buying a car.
You will have a choice to buy the car at the end of the lease, but the details of the contract matter if you decide to go that route.

Does your current vehicle look like it went through a war zone?

Wear and tear matters with leased cars, so consider the following:

If your kids will likely add their own touch, leaving behind stains on your car seats and carpet or you simply find it hard to keep your car in good shape, you may want to purchase instead of leasing. If you return the car in a condition outside of what’s considered “normal” wear and tear in your lease contract, you’ll be responsible for some additional costs. Check the terms of the potential lease for the specifics.
If you buy a car, you can pretty much do as you please since you own it. Wear and tear matters more if you want to resell the car at some point later down the road.

How fast do you rack up miles on your car?

There’s typically a limit to the number of miles (usually 12,000 – 15,000 miles per year) you can put on the car during your lease contract. Going over that limit will be an extra cost.

If you know you’re likely to go over the approved mileage, but still prefer to lease, consider purchasing additional miles upfront.
If you want to drive as far as you want and as often as you want, without restrictions or any additional costs, purchasing might make more sense.

Do you value being able to switch from one new car to the next every 3 or 4 years?

Leasing is an easy way to stay up to date with the newest models available.

We all have things that we value and are willing to pay for. If being able to drive the latest and greatest car is something you fancy, the lease could work great for you. Just make sure that constant monthly payments fit within your budget.
If you aren’t really into cars or you are the type to keep a car for 10 years, without payments, and feel like you’ve won, purchasing will likely make you feel more at ease.

Do you need a car, but you’re short on cash or don’t want to use your savings?

Depending on where your credit stands, you can typically get into a leased car for either no money down, or very little upfront and you usually have a lower monthly payment.

If you want to get into a car without eating up too much of your savings or lack thereof, a lease could work for you.
If you don’t want to return the car in the end or be faced with a choice to purchase it or go another route in 3 years at the end of your lease, you may prefer to simply purchase a car upfront.

The decision to buy or lease is a very personal one. It depends on your financial situation and what you prefer and value.

Either way you go, arm yourself with knowledge. If you decide to go with a lease, be prepared to negotiate the terms of your lease. If you decide to purchase a car instead, know what to consider whether you decide to go with a used car or a new car.

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Lessons in Car Shopping

August 30, 2016

If you have read any of my posts, you probably know that my family has a “hit me” sign on us every time we get into a car. We have been in two car accidents within four months of each other, and I am honestly not sure what was worse: the accidents or dealing with the insurance companies. After the dust settled, we found ourselves needing two cars. Luckily, we had adjusted to having one car and decided to get only one newer vehicle immediately. This began our car shopping odyssey.

The first thing we did was to contact the car insurance company we filed a claim with to ask for an extension. Surprisingly, they were willing to extend their coverage a few extra days and then they allowed us to use their much lower daily rental rate for an additional two weeks. If you are in a similar situation, contact the insurance representative assigned to you and plead your case. Having a few extra days or even weeks takes the pressure off of having to buy a car immediately.

Next, we decided on our budget and researched websites like Kelley Blue Book and Edmunds to gauge what type of vehicle we can get with the features we wanted within our car budget. Next, we reviewed the reliability rating using websites like Consumer Reports. Once we did the research, we were able to narrow down our selection to two types of vehicles. Before heading to the dealer, come up with a budget and research vehicles that fall into your budget so you have a realistic idea of what you can afford to get.

I am sure that there are wonderful car dealerships, but after dealing with high pressure sales tactics, we realized we do not have the time or patience for traditional dealerships so we decided to buy a car through an online dealer. After researching several online dealers, we found that in our case, the fees were cheaper, many had a money back guarantee, you can shop nationally (confirm any fees to transport the vehicle to you) and there was less haggling. We researched consumer complaints using websites like the Better Business Bureau and Yelp. No matter how great the online dealer may sound, do your due diligence by researching the company online for complaints.

After choosing our dealer, we were assigned a salesperson who did a great job asking us about our needs and wants and sending us vehicles that were within our budget. Within a few days, we selected the vehicle we wanted and after it was inspected and detailed, it was delivered to our doorstep. We were so excited and relieved that our experience was pretty painless – or so we thought.

About a week after getting our vehicle, the car had trouble starting. We took it to a mechanic to have it inspected, something we should had done as soon as we got the vehicle, and we found that it had transmission problems. We contacted the online buying service about the problem, prepared for a battle.

They asked to see the report of repairs the mechanic put together. Less than an hour later, they called us and apologized. They said they used a new mechanic for the inspection, and he obviously did not do a good job. Much to our shock, they immediately offered us three options. They offered to pay for all repairs, give us our money back or search for another vehicle using our full purchase price as the trade-in value.

After careful consideration, we decided to trade the vehicle in and ended up in a better vehicle for a lower price. No matter how great the vehicle initially is working, get it thoroughly inspected while you are in your money back guarantee period. Also, make sure that any guarantees or warranties you were offered is in writing.

Even though our car buying experience did not go exactly as planned, we would still include online car dealers when car shopping again. Don’t limit yourself. As you start to think about buying a car, explore all of your choices to help you find the best vehicle for your needs.

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What Can Superbowl Ads Teach Us About Financial Decisions?

January 13, 2012

I just read this article about NBC selling out all of its Super Bowl ad inventory. $3.5 MILLION is the average price for each 30 second ad!!! Wow, that’s a lot of money. (Unless you’re in Congress where even $3.5 Billion doesn’t seem like a whole lot of money…..) What do the companies who purchase these ads get? A big audience and the chance to make a memorable ad that hopefully drives customers to purchase more of their product or use their service are their rewards. But $3,500,000???? Really???? That’s a big expense for any company. For some companies, it pays off. For others, it’s not very effective. So, spending money isn’t always the best choice! (Are you listening, Washington D.C.?) In our own lives we can incur big expenses. The question we have to answer is if it’s the right choice. Continue reading “What Can Superbowl Ads Teach Us About Financial Decisions?”