Buy or Lease? –

Today, nearly 30 percent of all new vehicles "sold" in America go to consumers under lease agreements. But that’s no real surprise with the average cost of a new vehicles rising each year. Leasing has become a more widespread option available to consumers through a number of different sources including auto manufacturers, financial institutions, and independent companies. The advertisements are appealing when you consider getting the vehicle of your dreams at a payment less than what one might be paying for a two or three year old car that is a model line below the one you’re considering for lease. Having the proper knowledge is your only ally when you enter negotiations. Here now is that knowledge, your job is to decide if a lease is for you!

Profile of a Lease Candidate

* Those who must (or wish to) change vehicles every two or three years.
* People whose auto expense is subsidized or is used for business.
* Someone with very good credit.
* Someone who drives less than 12,000 per year

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THE BEST LEASES ARE DESIGNED TO WORK WITH LITTLE OR ZERO CASH DOWN. AND, FOR A TERM LESS THAN 48 MONTHS!

If they tell you more than 48 months, get up and walk away. If they tell you its 60 months or longer, get up and run away!

Advantages

* Lower monthly payments

* Little or no down payment

* More vehicle for less monthly payment

* Sales tax paid over lease term

Disadvantages

* No ownership in the vehicle

* Early termination liability * Charge for wear
* A $100 to $400 fee charged if you don’t buy the leased vehicle or lease
another vehicle with the same leasing company.
* Higher insurance requirements.
* Annual mileage limits of usually 12,000 to 15,000. Once exceeded a
penalty of .15 to .20 cents per mile is incurred.

The Basic Buying Premise ...

The good news is that you own the car after all the payments are made. The bad news is that by the time you own the car, the maintenance may cost you more that the car is worth. Consider a GOOD extended warranty. (Refer to the warranty section for how to select the best warranties.)

Most people finance the vehicle they buy. They accept a 60 to 72 month term, drive it for two - three years and then trade it for a new vehicle. People hurt themselves doing this "early trading" as they refinance part of the old with the new!

Buried! Flipped! Upside Down! Inverted!

The greatest mistake is to attempt to trade a vehicle prior to the last 12 to 18 months of the term. It is possible to "bury" that is, hide inequity, but it will show somewhere and that is in the financed amount and subsequently the payment.
If you just have to trade every two to three years and can maintain your miles within the twelve to fifteen thousand mile yearly limits…Lease your vehicle because buying will continue to "bury" you further and further every time you trade before the buying term is over!

Smart buyers and/or lessees’ realize that a vehicle is a machine, drive it to their advantage and trade it to their advantage.

Questions or comments? E-mail us

(c) Copyright 2003. Jim Estrada & Associates. All rights reserved.