Are you shopping for a new automobile or to replace the one you have?

Once you find the car or truck that fits your budget and lifestyle, your next step is to figure out the best way to finance the vehicle. In most cases, you’ll have to choose between purchasing and leasing your new wheels. 

Then you will have to determine the best way to finance it. Even if you can afford to pay cash, that’s not necessarily the right move. Manufacturers such as Toyota offer 0 percent interest on some models.

Leasing offers lots of flexibility, according to Mike Hefel, finance manager at Anderson-Weber Toyota in Dubuque, Iowa. 
He points out that at the end of your three-year lease, you have several options moving forward:
  • You can simply turn in the keys to the car and walk away;
  • After your lease is up, you can buy the car, and, in most cases, Toyota will loan you the money at new car interest rates, which are lower than the rates charged to finance the purchase of a used car; or
  • You can use any equity you’ve built up in the car toward your next lease. Since the value of the car at the end of the lease is determined when the agreement is signed, you might actually have some trade-in value.
“Let’s say, for instance, that Toyota says a Camry will be worth $13,000, and the market value is actually $15,000 after three years. You can use that $2,000 toward your next lease,” Hefel explains.

Other factors can make leasing a better option than buying. For example, the manufacturer’s bumper-to-bumper warranty will probably be in effect for the length of your lease agreement, so you’ll be paying almost nothing for maintenance and repairs. In addition, you’ll likely be able to get a better interest rate if you are leasing, which contributes to a lower payment, and, if you buy a new car, it will depreciate in value the minute you drive it off the lot. Furthermore, if you continue to lease, you’ll have a new car or truck every three years, and you’ll never have to hassle with trading in your old vehicle. 

So why would a customer buy rather than lease a vehicle? Hefel says some drivers simply prefer ownership over leasing because they don’t want to be burdened with a car payment. He adds, however, that many car buyers lease for three years, then borrow money to purchase the car and keep it for 10 years or more.

“You can make all your lease payments up front, so you won’t have a car payment until your lease is up in three years.”
He points out that there are some advantages to buying rather than leasing. For instance:
  • You will be able to sell your vehicle or trade it in on a new car or truck whenever you want to; and
  •  All things considered, you’ll save money in the long run, especially if you do a lot of driving. Hefel says most leases have limits on the amount of driving you can do without paying a penalty – usually 12,000 to 15,000 miles per year.
For more information or any questions that you may have, give us a call at (888) 732-5357 and speak with our Finance Experts today! We'll make your next car buying or leasing experience the best you've had!