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Buying a Vehicle vs. Leasing
Transcript of Buying a Vehicle vs. Leasing
Low Monthly Payments -- Payments on leased vehicles are generally lower
Easy Turnover -- You can have a new car every few years.
Low maintenance - Most vehicles would remain under warranty during lease term.
Possible tax advantages (especially for business) Cons of Buying Higher up front down payment and monthly payments
Affordability - Not able to afford the vehicle
Repair Bills- after warranty expires the overall maintenance goes up significantly (ie tires)
Depreciation - Very high levels of depreciation after the first year. by Chris Holborn BUY OR LEASE Decision Making Factors
Price of Car vs Lease
Interest rate of Loan
Length of Loan
Penalties for early termination of lease No Equity -- You won't own anything after the lease is over
Lack of Flexibility -- You are signing a contract for a specified time
You May Pay Extra -- mileage, wear & tear, etc...
Insurance May Come Up Short -- Gap Insurance Equity- You own something that should be worth something to someone
No Mileage limits or hidden fees
No lease terms - you have freedom to buy a new car at any time
Peace of mind- Money paid into has value at the end The Math Always do the math In the short term, leasing can be proven to save money!
If you want to buy a car that is $30,000. To buy it, with a 4% four-year loan and a down payment of ($5,000), your payment would be $620 a month.
However, if you were to lease instead, you might pay 2000 down payment and $420 a month.
Leasing would save you $200 a month, and more than likely you wouldn't need a big down payment. Over the first three years you would save money considerably.
In the long term, buying a car can be proven to save money!
If you plan to keep a vehicle long term than the cost reverses itself as you would not make any payments when loan amount is met. Terminology Depreciation: The amount by which a vehicle loses its value over a specified period of time, which is the difference between its original price and its residual value later.
Opportunity Cost - the next-highest-valued alternative use of that resource
Capitalization cost (cap cost): The total price of the vehicle, which the lessor uses to calculate the amount that the customer will be paying. This is equivalent to the purchase price of a vehicle that's sold.
Residual Value:estimated worth of the car at the end of your lease
Gap Insurance: In most cases, your regular auto insurance covers the leased vehicle.
http://auto.howstuffworks.com/buying-selling/how-to-lease-a-car4.htm In Conclusion Needs vs. Wants Think long term Do the Math! http://money.msn.com/car-buying/lease-or-buy-a-car-comparison-calculator