To lease or to buy? It's a question many consumers face when they're in the market for a new car. Each option has its pros and cons and to examine some of them, we consulted Robert Sinclair of AAA.
We start with leasing.
"If you're accustomed to having a nice shiny new vehicle every two or three years, you don't mind having monthly payments and you don't drive a lot of miles every year and they are gentle miles, lease," said Sinclair.
Sinclair said while the average lease has gone down by more than 40 percent, there are other costs to consider.
"At the end of the lease, you are charged for excess mileage and wear and tear and 35 percent of those who lease wind up having to pay those fees," said Sinclair. "There are also cap costs, residual costs, termination costs there are a myriad of costs that have to be analyzed."
To lease or to buy? It's a question many consumers face when they're in the market for a new car. Each option has its pros and cons and to examine some of them, we consulted Robert Sinclair of AAA.
If you decide to lease another vehicle with the same dealer, you can probably avoid the mileage and wear and tear costs, but that means locking into yet another deal.
As for buying…
"If you like having a long time that you own your vehicle, you don't mind it getting older, and you like having a long time period when you're not making any payments, buy," said Sinclair.
And at the end of your payments, you own the car. But unlike leasing, when you buy, you're most likely to get a more affordable vehicle.
So what should you consider?
"When you purchase the vehicle, it's a much simpler deal," said Sinclair. "The only thing you have to worry about is the price of the vehicle, the financing terms, the value of your trade-in and any factory incentives."
You can find a variety of cost calculators on the internet comparing leasing versus buying. However, they may not have all the answers, so do your homework.
"Remember what the large print giveth the fine print taketh away," said Sinclair. "So you really have to understand these things fully before you take delivery of the vehicle. Once they hand you the keys and you drive away, it's too late."
Now if you've save up enough money and want to avoid those monthly payments, paying with cash is an option, but it may not amount to a better deal.
"A dealer makes money on the financing portion, so you're not necessarily going to get a lot better deal if you pay cash," said Sinclair. "And if you finance with the dealer you might not be getting as a good a deal as if you went to your bank or your credit union."
So be sure to compare interest rates, so you can drive a better bargain.