With the automobile market becoming increasingly competitive,
there are a lot of tempting deals out there for a family in the market for a
new vehicle. Low monthly payments, 0% APR and scores of other shiny bells and
whistles are jangled about to distract you from your senses. Whether you opt to
lease or purchase, there is always a degree of financial risk, so it is crucial
to weigh up some pros and cons before making a final decision.
Leasing a new car
For those who don’t want to commit to an aging model year after
year, leasing is an easy choice. On leases, the initial down payment can be
cheaper than buying new and the set monthly costs can be less prohibitive than
those of a car loan. Auto repairs are often factored into the deal, too.
However, families who might struggle to commit financially to a lease term
should be wary. Monthly costs factor in depreciation, so there may be
restrictions on mileage, which means leasing will not be practical for owners
with lengthy commutes, or those who use their vehicle for business.
Buying a new car
If you’re lucky enough to have the capital to buy a new car outright,
it’s unlikely you’ll be wasting your time with this article! Most of us,
however, will have to take on some sort of finance deal if we want a new model.
The main advantage of buying a car over leasing is that at a certain point of
ownership (usually around the five year mark), you begin to build equity,
rather than losing it. Insurance rates for buying a new car are slightly
cheaper than a lease car, and if you don’t need to refresh your spec every
three years, this could be your best new car option.
Buying a (reliable) used car
Buying a used car from a reputable dealership can be a good
compromise for families on a tight budget, or those who don’t want a future
hampered by unmanageable debts. For peace of mind, choose a car with a one or
two year warranty, and your insurance premiums, depending on the model, will be
more favorable. When you walk into the dealership, have an arsenal of haggling
tools to hand; your best will be immediate payment. Keep a stock of objections
in mind to keep the salesman on his toes.
Car deals are variable, circumstances change, and buying a car, on
any terms, is a risky undertaking. The best you can do is equip yourself with
the right information, and always keep your personal circumstances in mind. For
more information on the pros and cons of buying vs leasing your next car, check out this nifty guide.
