Are you in the market for a new car? If thoughts of sunroofs, heated seats, and “push to start” technology are swirling in your head, then you need today’s post!
Buying (or leasing) a vehicle is a big deal! Sure, in theory, this process should be as easy as selecting a candy bar from a vending machine (Reeses Cups, anyone??), but in reality, this decision is far from a little routine purchase.
So, if you’re planning on making some test drives in the near future, keep these key considerations in mind to ensure you make the best, most informed decision.
1. Understand what you can afford
Having a vehicle is a big responsibility. Before you add this potential expense to your plate, be sure you’ve updated your budget so that you can fully understand what you can reasonably afford. How much can you realistically spend each month on your car payment, car insurance, and gas? Depending on the automobile you select, your gas bill may be substantially impacted. Take some time to know what is “in scope” and what you are able to accommodate prior to setting foot in a dealership.
2. Establish your timeframe
How long would you plan to own or use this vehicle? If you’re planning to use this car for the long haul, you may be better off buying it. On the other hand, maybe you know the next few years are going to be full of change and you’ll likely need the flexibility to adjust vehicles accordingly. In this instance, you may be better off leasing the car so that you can make a switch without worrying about having to trade in or sell your car later on.
3. Assess your mileage needs
Most leases place hard limits on the amount of miles you can accrue or travel during the course of the lease. If you’re always on the go and routinely logging plenty more than 1,000 miles in the car each month, you might be better off owning the vehicle so as to avoid paying the steep price/mile for your overage at the time of turn-in.
4. Understand your credit score
Do you know your credit score? Having a good credit score is very important when making a big purchase like this. If you know you are in the market for a new vehicle at some point in the near future, do yourself a favor and keep that credit score in good shape. What does this really mean? Avoid opening up new credit cards or making any other big purchase that may result in unnecessary hits to your credit. Additionally, continue making all minimum monthly payments, and avoid carrying a balance on your cards if you have the ability. Although minor adjustments, these tips can help make sure your credit is as high as possible when it comes time to signing on the dotted line for your new automobile.
Need more help making this decision? We’ve got you covered with our handy Pro/Con list:
Pros of Buying a Car:
- You can customize the vehicle as you’d like (and make any upgrades!)
- You will have something of value to “trade-in” if your circumstances change
- You will not have to worry about how many miles you log in your vehicle
Cons of Buying a Car:
- You are responsible for any maintenance and necessary repairs
- Vehicles are depreciating assets – they very rarely increase in value
- You may likely have a higher monthly payment initially
Pros of Leasing a Car:
- Flexibility – you will be able to lease a new, updated vehicle every few years
- Provides a great opportunity to fully “experience” a car to see if it’s a good fit for the long haul
- This option typically offers slightly lower monthly payments
- Maintenance and general upkeep may be included as part of the lease agreement
Cons of Leasing a Car:
- Inability to cash in on the “trade-in” value of the vehicle
- There may be penalty fees associated with any damage and general wear and tear incurred during your lease
- You also may pay the penalty for accruing excess miles above and beyond what was included in your lease agreement
- You may likely pay more in the long run (vs. owning a car outright)
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