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How are
Auto Loans Different from Leasing
Programs? (Part II)
This is the second
article in a two-part series as to what is
better for your lifestyle, and your wallet
a car loan or a lease. Last time we
covered payment amounts, equity in the
car, and down payments. This time we are
going to look at how much you use the car,
whether you want to own or rent, and miles
you drive.
You have to look at how often you change
out cars. If you get a new car every
couple of years, then it might be better
to do a lease. But if you like to run your
car to the bitter end, then an auto loan
is the better way to go. General rule of
thumb if planning on keeping the car
three years or less get a lease
otherwise, get an auto loan. With a lease,
you dont have to give up the car at the
end of the lease, you can choose to buy it
outright, but then you have been making
payments on a car for three or so years,
only to get into more payments for the
same car. It does not make sense to try
and own the car after you have leased it,
unless you really love the car.
It is like owning a home do you want to
own your car or do you want to rent it for
a couple of years. Many feel that we
should own homes and rent cars, and that
most people do it backwards. We maintain
that it is still up to the individual. Do
you want to get an auto loan and then have
the car to do with it whatever you please?
You can add a new stereo; change the
color, etc. because it is your car. With
a lease you have to maintain the car for
the next owner because if the car is not
in good shape when you hand it over, you
will have to pay extra on your lease.
You also have to consider how much you
drive are you in the car for business
all the time? Do you take road trips
often? Or do you drive the five miles back
and forth to work every day and nothing
else? If you drive a lot you might want to
consider an auto loan. With a lease you
have to say how many miles you think you
might drive somewhere usually around ten
or fifteen thousand a year and you need
to stay to the amount you agree on in the
contract. If you go over in the number of
miles you have agreed upon, you will have
to pay the dealership an amount per mile
that you are over which can get very
expensive.
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