To Buy or To Lease? Best Practices for Car Shopping


Have you been considering a car lease? I've heard people say that they enjoy getting a new car every few years or that they like lease because they believe the tax write offs are more favorable for self-employed persons. Ask yourself a more important question. At the end of a lease, what are you left with? 

Buying a car is all about limiting the loss. Cars are depreciating assets meaning they will never be worth more than they were the day you buy them. This sinking value is due to wear and tear of the car parts, the aging base of the technology, and body styles becoming outdated. Your car is a sinking ship from the moment you first step inside.

When you lease a car, you're paying not only for the use, but the depreciation of the vehicle as well. At the end of your lease, the only thing you have to look forward to is another lease. Every month you'll be able to look forward to a payment with no end in sight. 

When you purchase a car, you'll have the car itself to use as either a trade in or for continued use long after you've paid for it. 

Let's put some old myths to rest here. First of all, buying a used car isn't buying someone else's problem. We've left the 80's behind folks. Your average Volvo, Toyota, and Honda are running well through 200,000 miles on the odometer. Certified pre-owned vehicles purchased from dealers and with a clean car fax report are in top shape. Lots of people want a Lexus, Mercedes, or BMW but if you can't buy a car in one payment then it's probably more than you can afford. If you are going to finance your vehicle, you should stay away from loans that are greater than three years and your payment, licensing, insurance, maintenance and gas should total to 10% of your monthly income or less. 

Ask yourself what's really important to you. Are you trying to impress those around you? Are you feeding your jealousy of what others have when you shop? Stay within your budget and means. Car purchases are one of the most expensive and frequent transactions we make in life. Keeping your eye on your highest priorities is one of the surest ways of achieving them.