Should You Lease or Buy-to-Own a Vehicle?Should You Lease or Buy-to-Own a Vehicle?

Frequently Asked QuestionsFrequently Asked Questions

Let's weigh the optionsLet's weigh the options

Advantages of Leasing:

1. Lower monthly payments

2. Low or No Down Payment

3. More Car, More Often

4. Fewer Maintenance Headaches

5. Lower Up-front Cash Outlay

6. No Used-Car Hassles

7. Gap Coverage usually included

Advantages of Leasing:

1. Lower monthly payments

2. Low or No Down Payment

3. More Car, More Often

4. Fewer Maintenance Headaches

5. Lower Up-front Cash Outlay

6. No Used-Car Hassles

7. Gap Coverage usually included

Let's weigh the options: Cont...Let's weigh the options: Cont...

Disadvantages of Leasing:

1. Early Termination Cost

2. No Ownership Equity

3. Excessive Mileage Charges

4. Excessive Wear-and-Tear Charges

Disadvantages of Leasing:

1. Early Termination Cost

2. No Ownership Equity

3. Excessive Mileage Charges

4. Excessive Wear-and-Tear Charges

Let's weigh the options: Cont...Let's weigh the options: Cont...

Advantages of Buy-to-Own a Car:

1. Pride of ownership

2. Buy-to-own is more economical in the long run

3. No penalty for driving excess mileage

4.  Increased flexibility

Advantages of Buy-to-Own a Car:

1. Pride of ownership

2. Buy-to-own is more economical in the long run

3. No penalty for driving excess mileage

4.  Increased flexibility

Let's weigh the options: Cont...Let's weigh the options: Cont...

Disadvantages of Buy-to-Own a Car:

1. Higher down payment is generally required.

2. Higher monthly payments

3. Maintenance costs 

4. Trade-in or selling hassles

Disadvantages of Buy-to-Own a Car:

1. Higher down payment is generally required.

2. Higher monthly payments

3. Maintenance costs 

4. Trade-in or selling hassles

Let's do the math:Let's do the math:

 

1. Lease a car at $500.00/month for 60 months

2. Total payments = $30,000.

3. Overtime - the car will lose value.

4. After the lease - Estimated market value may be $18,000

5. Profits to the leasing company: $30,000 - $18,000 = $12,000 and they keep the car.

 

 

 

1. Lease a car at $500.00/month for 60 months

2. Total payments = $30,000.

3. Overtime - the car will lose value.

4. After the lease - Estimated market value may be $18,000

5. Profits to the leasing company: $30,000 - $18,000 = $12,000 and they keep the car.

 

 

Better to Buy than Lease a CarBetter to Buy than Lease a Car

• The interest incurred when leasing a car is never disclosed because technically, you are not taking out a loan. You’re just renting the car.

• But if you buy to own, once the payments are complete, the car is yours.

• The interest incurred when leasing a car is never disclosed because technically, you are not taking out a loan. You’re just renting the car.

• But if you buy to own, once the payments are complete, the car is yours.

How much Should I spend on a Car?How much Should I spend on a Car?

The Rule of Thumb:

• Automobiles/boats/bikes should add up to one third of your take home pay.

• You should not invest in items that depreciate in value overtime.

The Rule of Thumb:

• Automobiles/boats/bikes should add up to one third of your take home pay.

• You should not invest in items that depreciate in value overtime.