A Guide to Buying or Leasing your next Car
There has always been a constant debate as to whether one should lease a car or buy one. If you purchase your vehicle, you have to face the burden of having to pay higher monthly limits. But in the end, you will have your vehicle. However, there is leasing where you will pay lower monthly, though you will almost never stop paying for that vehicle, because the payments continue for years. I don’t know about you, but there are many who prefer leasing rather than getting a car loan, but everything depends on your perspective.
The top tips to help you buy or Lease the Right Car
To put it short, buying and/or leasing a new car has to be done right. You need to know that you’ve got the right deal, and that the car will stay in shape for a long time to come. So, whether you choose to buy or lease, here are a few basic guidelines that are sure to help.
#1. Know your budget
A car will not make you money, but will take it. However, the only way you can obtain value from your vehicle is through mobility; thus you need to find a car which fits in your budget. If you are considering whether to buy or lease, you need to consider the total cost you will be accumulating.
Some factors you need to consider when you’re budgeting for a car include:
- Total price of the vehicle, considering tax, registration fees, and extended warranties.
- Monthly payments.
- The down payments.
- The total debt you will need to repay.
Tip: Before you buy a car, it is best to consider the 20% rule. This means that you need to sacrifice 20% of your total income to finance your vehicle. For instance, if your monthly income is $5000, then you need to finance your car with $1000.
#2. The Up-front costs
When you have made your choice on which method you will use to obtain your vehicle, then you will have to face up-front costs. However, there is a big difference between leasing and buying in this respect.
For instance, if you lease a car, the values will be smaller than when buying. So you should not be surprised that when you are renting a car, you will be asked for the first monthly payment, tags, registration, titles, taxes, and probably a security deposit.
However when you are buying a car, then a down payment is required of the total price of the vehicle. It might be a bit expensive if you do not have sufficient funds; thus perhaps you should opt to lease a car as you save for the future.
#3. Lease vs. Loan
I think at this juncture you understand the result of either leasing or buying a car. This is how it works. If you lease a car then at the end of the term you will need to return it and start looking for a new method of transportation. Also you might have to pay some damage fees or mileage fees. In any case, you have to return the car.
On the other hand, once you buy a car and you finish paying off the loan, then it is yours. Therefore, in this case, it is best if you purchase a vehicle, so how about you start saving up. If that proves a bit too tough for you, then you can opt to take a loan. Financial advisors will tell you that you should not make a credit which exceeds more than 48 months because if you take a car loan that exceeds this period, then it will have less value. Therefore a short period will give you a significant amount which you are looking for in an automobile.
#4. Do your research beforehand
Should you first visit a creditor to view your loan options before going to the dealer? The answer is an emphatic yes. If you have ever bought a car, then you know that car dealers are shrewd at negotiations. They will take advantage of you at the slightest opportunity.
Doing your research will not only help you with setting a reasonable budget, but you will also learn how to negotiate and prevent yourself from yielding to potential beguilement. You can do your homework by visiting multiple dealers, so that you might determine the best price, for the car you want. You can also decide to research cars online, to check out everything you need. However, as you do your research, take your time so that you are absolutely sure about what purchase you want to make. If you rush into it, then you will certainly not get the best deal. Who wouldn’t want to save an extra penny?