-
Step 1
Ask yourself this question: do you plan on keeping the car longer than 3 to 4 years?
-
Step 2
If yes, your best option is to buy. At the end of your finance period, you own your car. It is yours to do with as you wish. You can drive it as far and as tough as you like. When you own your own car, you no longer have monthly payments to make to your lender.
You also can save money by removing collision coverage from your auto insurance policy.
If you use a home equity loan instead of a traditional auto loan, the interest may be tax deductible. -
Step 3
If no, your best option is to lease. If you trade cars frequently, you are throwing away money. With a lease you only pay for the car's depreciation, not the entire car. A car depreciates in value during the first year, and continues to depreciate rapidly until the third or fourth year.
Your monthly payments are much lower.
You can free up you cash to invest in other areas. A car is the worst investment Americans make (aside from the oceanfront property in Arizona scam), so when buying a car, think of it as an investment and not a great purchase.
Novelty:
If you relish have a new shiny car to show off or love the "new car smell," this is for you.
Maintenance:
Leasing a car allows you to drive a new car which means you are unlikely to run into maintenance costs. So you have little worries of breaking down on the freeway.
Many dealerships will give you free maintenance packages such as oil changes, tire rotations, etc. if you lease a car from them. -
Step 4
Weigh the negatives of a lease prior to signing. If you drive over 16 thousand miles per year, you should negotiate this into your lease agreement. If you go over your mileage limit, you will pay a substantial penalty.
You have to buy another car at the end of the lease. Plus, you consistently pay for a new car every 3 to 4 years.
With most leases, you often have to make a substantial signing
