September 19, 2018

Buy A Car or Lease

Buy or Lease a Car

When your current car is ready to give up the ghost, you need to consider your next step carefully. Buy or lease?

When your current car is ready to give up the ghost, you need to consider your next step carefully. Buy or lease? There are good reasons and downsides for either option, depending on your particular circumstances.

With leasing you have the advantage of getting behind the wheel of a new car every few years. And you sidestep the hassle of selling before you replace the vehicle. In general, your lease payment will be smaller than what you’d pay on a loan to purchase. And if you will be using the vehicle for business purposes, you can count some of the depreciation and financing costs as tax deductions.

Leasing has become more popular as vehicle prices rise, the experts report. In that market, leasing may be more attractive, even to those who would really favor an outright purchase.

Here come the caveats: Car lease agreements include mileage limits. If you surpass the limit, you may pay 15 to 20 cents more per mile.

When you turn the vehicle in, you will be charged for dings, cracks, scratches and general wear and tear. Should you want to end the agreement before the lease expires, you could pay penalties for up to six months.

So, if your choice is to buy a new vehicle, here’s what to look for. One of the advantages is simply that when you have finished paying for it, it’s yours. If it is possible to pay for it outright, of course, you bypass the interest payments.

Look for a lender with a good interest rate. The shorter time you can take to pay off the loan, the better. Three years or less is a good target. If it has to extend beyond that, try to pay off earlier than required by adding a little to each payment, again to save interest.

You can drive your vehicle without any of the restrictions of leasing, including penalties and fees. And if you choose to get another car after you are paid off, you can use it as a trade-in.

On the downside, purchasing makes you responsible for repairs and maintenance. Once the warranties expire, you must pay out of pocket unless you purchase a maintenance agreement.

It is likely your payment will be greater than lease payments. Use a payment calculator to see what you are facing and be certain the amount stays within your budget limits.

About Twila Van Leer

Journalist/writer for more than 50 years. Pulitzer Prize nominee, 1983 for coverage of the first permanent artificial heart. More than 50 national, regional, local awards for news writing. Main writer for a memorial book for Deseret News' 150 th anniversary and for a book recounting the 1997 re-enactment of the pioneer trek from Omaha to Salt Lake City. Co-writer and editor of "True Valor," a book on the history of the artificial heart. Author of the book, Life Is Just A Bowl Of Kumquats, a wonderful story of a house wife and her trials with raising a large family.