The age-old question that many customers ask after selling us their car. Whether they’ve saved enough to upgrade or want to keep things simple, unfortunately the answer never simply leans one way or the other. There are several lifestyle factors that you (and your family) must consider before pulling the trigger on leasing or financing your next vehicle so here are some things you should think about.
Typically, leasing a vehicle signs you up for a 3-year commitment. Combine that with the standard 10,000 miles allotted annually and you’re aiming to give the car back with 30,000 on the odometer. Anything over that can add up to be costly depending on your agreement with your dealer (usually 10 to 20 cents each additional mile).
If your daily commute is far, you’re an avid road-tripper or use your car to drive for work then leasing may not be right for you. In many instances, you can get reimbursed or write-off some of your mileage if it’s work related but we wouldn’t recommend that being one of the main components to consider. Financing gives you the freedom to do as you wish being that it is your car and not technically the dealer’s.
Maintenance and Reliability
A big appeal to leasing new vehicles is being able to have peace of mind when it comes to anything that may go wrong with the car. Many lease agreements come with a warranty that takes care of anything that may be defective or go wrong throughout your time with the car.
Same goes for financing a newer vehicle, however after your odometer reaches a certain mileage or your car becomes a particular age, repairs become your problem. Extended warranties are available (by third parties as well) but at an additional cost which you would need to factor in if you choose to keep the car long-term.
If you’re choosing to purchase/finance an older vehicle, make sure to check these things:
- If the car is still under factory or a third-party warranty
- Service history – A well-maintained car with records to prove it can do a lot of good in terms of saving you money down the line. A car with little to no maintenance records could cost you a pretty penny if something catastrophic would happen.
- PRO-TIP – The internet is your friend. Being the behemoth of information it is today, the internet is filled with car forums, blogs, and auto magazines that are dedicated to particular makes and models so use it as a resource! After a car has been around for a while, there’s a good chance you can find people that share their dire love (as well as utter frustrations) for the car you are looking for. If you’re a DIY person who likes to work on your own vehicle and save costs, forums can be the perfect place for you.
Some prioritize the latest and greatest technology while others simply want what’s safe and reliable. Whatever your preference may be, leasing a car (given a 3-year cycle) allows you to hop into something with the newest features and by the time your term is up, you can do it all over again. If you’re more of a “my car just gets me from point A to point B”, financing an older vehicle may suffice.
Payment and Budget
If you want a new car no matter what and are torn between financing or leasing, here are a few things to take into consideration…
If your budget is tight and you want as much free cash as possible, chances are you should lean towards a lease. Depending on the type of car, credit score, special offers etc. some leases offer $0 down payment, first payment paid for and other incentives to get you in the vehicle. Lease payments are also typically lower than if you were to finance the car (because you don’t own the vehicle and will be giving it back at the end of your term) so if you just want a shorter, less expensive commitment then this would be the route you would want to take. Do note however, if you end up loving the car you can always buy it out at the end of your term at the price agreed upon by your dealer so take that into consideration before you sign your lease agreement.
Financing a car is usually over a 5-year span with a higher deposit and higher monthly payments because you’re paying for the entire price of the vehicle. That being said, it is your car and therefore can do as you please. Whether you want to get new wheels, upgrade performance or paint your car, you can do as you please without worrying about repercussions when you give it back to the dealer if you were to lease. whatever it may be. A downside to financing a brand-new car is the huge depreciation hit it will take once it’s driven off the lot. A good pro-tip might be to look for the same vehicle that is 1-2 years older than may have already taken that hit which can potentially save you thousands in the amount you’re looking to finance.
It’s always fun to hear how excited customers get when talking about their next car after we buy theirs but some don’t know where to start. With so many options available and countless dealers claiming they offer the best rates, getting your car can become overbearing. Committing to your next car is a big deal so we hope our mini-guide helps!