New Car Buying Tip #2: To Loan or To Lease, That is the Question?
There is never a completely correct answer for this question that is asked year after year. The reason this question is constantly asked and never really answered, is because it really depends on the current rates being given on a loan for purchasing the vehicle and the purchasers needs.
Leasing can be a great way to purchase a car and it can be a bad way. When loan rates are low as they are at the moment, the savings associated with leasing a vehicle at a reduced interest rate is not as significant and therefore not always as worth the trouble.
When we say trouble, we are talking about the necessity to lease another car every few years and mind your mileage during that time. Remember, if you go over your prescribed mileage you will get dinged in the end, which is definitely something you will want to avoid.
This scenario is also putting you in a never ending cycle of payments, such as renting from an apartment, rather than purchasing a home through a loan. But if you like to move around from year to year, the apartment might actually not be such a bad investment, as you won’t have to deal with the selling and repurchasing on a constant basis.
The same goes for the auto. If you like to slip behind a set of new wheels every few years, then the lease isn’t as bad as some might try to tell you. Another bonus of a lease, is it allows a consumer a few years to test out a vehicle they were considering purchasing, but weren’t sure if they would actually want to own it over the long haul.
If the vehicle is not what the consumer wanted, they can walk away free and clear from the vehicle and move onto something else. If they like it, they can go ahead and purchase the vehicle at hopefully a good rate. Your decision hear may in fact not only depend on whether you liked the vehicle, but also what kinds of loan rates are being offered at the time.
The key to the whole loan or lease question is to look at the rates being offered at the time you are considering purchasing a new vehicle. Then decide if you like the vehicle enough to stick with it for five or more years. Don’t always listen to what the dealer advises you, as they are not always looking out for your best interest, but rather the best interest of their own check book.
There is no prescribed right or wrong to way for going about this. There are just some years when one right is a little more wrong than the other… Currently loans are on the rise in popularity while leasing is on the decline, but it is only a matter of time before the good rates disappear and then leasing will make another come back.
