Should I Buy or Lease a Car?
There are a few financial milestones that each of us hopes to pass throughout our lives, our first car purchase, the purchase of our first home and the education of our children. But it’s the purchase of our first car that ignites in us a sense of freedom and possibility. No matter what stage of your life you are at, or which step you are about to take you need to educate yourself on all the terms, options, packages and policies available. Only once you have educated yourself on all your possible options can you make a choice that is right for you and your financial future. One of the first steps in financial adulthood is the purchase of your first car.
There are two payment options when it comes to owning a car; leasing or buying, therefore it is imperative to consider all contributing factors before deciding whether it is best for you to buy or lease as both options have several benefits and downsides. You need to evaluate your reasoning for purchasing the vehicle – your budget and your spending behaviour. You need to consider how much you plan to drive, how often you would like a new car and if you would like to customise your car. Both options are reasonable but only one is the right one for you and your finances. There are however a few things to consider before deciding whether you are going to lease or buy your car;
What type of car are you looking for? What are you looking to get out of your car? Is its sole purpose to get you to and from work? Do you want it to be fast or steady? Big or small? Is the car you want a family car or for yourself? Will you use it for long distance trips? The type of car you choose will have a significant impact on how much it will cost you to both leases or buy the car so it’s essential to have an idea of what requirements need to be fulfilled by the vehicle. You need to narrow down your list of cars that meet both your financial prerequisites as well as your lifestyle ones.
Evaluate Your Budget
You need to evaluate your income and expenses to figure out what you really can afford. You need to ensure that the car that you want ticks all your lifestyle requirements as well as your financial ones. There is no point in having a car that cost you more than you can afford. This may be a slippery slope into the clutches of a monthly money battle with your finances. Your car is meant to add value to your life, this is only possible if the car comes within your budget.
Check Your Credit Report
To ensure you can afford the car of your choice you need to check out your credit score. Your credit score will indicate to you and most creditors how to determine the terms of your contract or loan. Knowing your credit score can empower you to make changes or correct errors before applying for a loan.
Consider how much you would like to save for a down payment. Remember the larger the down payment, the less you owe and the less interest you must pay back. Looking at your savings also allows you to evaluate your savings and decide whether you should save more before taking out a loan.
Research Loan Options
Once you have established an ideal savings amount – it’s time to research your loan options – and there are many of them. Should you try to get a preapproved loan from the bank you could use it as a bargaining tool when talking to a dealer. Consider and compare all terms; monthly repayments, length and loan interest before deciding what loan you wish to take out.
Owning a car is never just a once off payment – whether you lease it or buy it. It is essential to consider all the additional cost that comes with both leasing’s a car as well as buying one – additional costs such as insurance and registration, maintenance costs, and dent and scratch repairs cost need to incorporate into your savings plan.
Owning a car is a big achievement as well as a big responsibility. And deciding whether to buy or lease a car is a big decision. It’s also no small chunk of change, so you want to ensure you are making the best decision for you and your finances. Each option is beneficial in their own right – it depends solely on what will work best for you and your finances.