Choice is a good thing. You can choose what socks to wear, what caffeinated beverage you’d like to have, what TV shows to binge watch, and what presidential candidate to support.
Choice can also be a bad thing because, well, you actually must make a decision about something at some point. Take cars, for instance. If you’re in the market for new cars for sale near Kansas City, you can choose from a dizzying number of models, colors, trim levels, and options. Here at your hometown Chevy Buick and GMC dealership in Marshall, MO you can take your pick of the litter from three different GM brands.
But one of the biggest choices you must make is deciding how you are going to pay for your new car. You basically have three options. You can pay cash for your car, you can finance the purchase, or you can lease the vehicle. Let’s eliminate the first option since it’s generally less common and focus on the other two: Purchasing vs. Leasing. We’ll take a look at the pros and cons of each so you can make a more informed decision about which type of auto transaction is best for you.
The Benefits Of Leasing
First, let’s talk about what a lease is. When you lease a car, you are basically renting it from the dealership. Much like renting a house, you don’t build up any equity or value because the vehicle doesn’t belong to you. You are just paying a monthly fee to use the car for a given period of time.
There are two types of leases. One is called an “open-end” lease. Also referred to as an “equity lease,” this kind of lease obligates you to purchase the vehicle when the lease is up. The more popular alternative is a “closed-end” lease. When the lease is up, you have a couple of options. You can turn the car back into the dealership, hand over the keys, and walk away. Or, you can choose to purchase or lease another car without having to “trade in” the vehicle. You can also choose to convert the lease to a purchase by refinancing the balance owed on the lease.
The way a lease is financed is different from a straight purchase and this could work in your favor. When you lease a car, you pay the difference between the car’s original value and what the value of the car is estimated to be worth at the end of the lease. This figure is called the “residual value.”
Say, for example, you buy a new 2016 Chevy from our Kansas City Chevy Buick GMC dealership. The car is stickered at $30,000. We estimate that the car will be worth 50% of its original price at the end of the lease. Your lease payments would be calculated on the remaining $15,000 of residual value rather than the full purchase price. In some cases, this means that you could lease a more expensive vehicle than you would if you purchased it.
Some other benefits of leasing are that you can take advantage of promotional specials at McCarthy Chevrolet Buick GMC, which could allow you to lease a car with little or no money down and nothing due at lease signing. Depreciation and negative equity are no longer factors. And if you opt for a 3-year lease, most factory warranties will cover you for the entire lease period.
If you decide to lease a car, you should know that there are a few things about leasing that could be seen as negatives. First is the mileage cap. Typically most, if not all, leases put a limit to how many miles you can drive the car in a year. Typically, this ranges anywhere from 9,000 to 15,000 miles a year. If you exceed the number of miles in a given year, you will be charged for the extra miles you’ve driven.
One other thing. You must return the leased vehicle to the dealership in excellent condition, minus normal wear and tear. Otherwise, you could be on the hook for reconditioning costs. This also means that you can’t customize or accessorize your car.
Benefits Of Financing A New Car
Now that we’ve reviewed the pros and cons of leasing let’s take a look at the car purchase side of the equation.
When you buy a car from our Marshall, MO Chevrolet, Buick GMC dealership you enter into a sales contract that defines how much you will pay for the car. This figure is calculated on the agreed purchase price, the annual percentage rate (APR) that you’ll be charged in interest, the amount of your down payment, any fees, sales tax, the length of the loan term, and other factors. These items will be used to determine your monthly payments.
A purchase is different from a lease because you are “buying” rather than “renting” the car. Just like the purchase of a house, you accumulate equity in the vehicle. You will ultimately own the car free and clear once you’ve paid off the loan. This is great for those people who like the idea of owning something outright, and you may be one of them.
If so, you’ll appreciate not having to worry about mileage caps. You can drive your car as much as you want without any penalties. You can also customize your car to your heart’s content. And if your car gets some bumps and bruises along the way, you won’t have to worry as much about them. Unless, of course, you plan to sell or trade in the vehicle at some point in the future.
So what’s the downside to buying a car instead of leasing it? Well, there are several points to consider. The first is depreciation. The truth is, when you take your new Chevy, Buick or GMC home it, by definition, becomes a “used car.” This means that it loses some of its value right off the bat and will continue to do so for a period of time.
If you decide to trade in your car at some point, you may be faced with owing more on the car than it is actually worth. This is called having “negative equity” in the vehicle. A more familiar term is being “upside down” in the car.
Make The Right Choice At McCarthy Chevrolet Buick GMC
Like we said at the beginning, whether you lease or finance a new car depends a lot on your financial picture, your lifestyle, and your needs. If this is all a bit confusing, we’re here to help. Our McCarthy Chevrolet Buick GMC Finance Department can help you make the vehicle purchase decision that’s right for you.
In fact, we’re experts at getting people just like you into the new 2016 Chevy, Buick, or GMC truck of your dreams with a lease or financing package that’s tailor-made to fit your budget. Even if you have less-than-perfect credit, we have the programs that will put you behind the wheel at a price you can afford.
You can get the ball rolling yourself before you visit our dealership by filling out our online finance application. Use our payment calculator to estimate your monthly payments. You can also value your trade-in online by giving us a few details about your current vehicle.
Why not stop by our Chevrolet Buick GMC dealership in Marshall, MO today and let us show you just how easy it is to drive away in one of our well-equipped new 2016 Chevys, luxurious new 2016 Buicks, or Professional Grade 2016 GMC trucks or SUVs.
We’re conveniently located at 1550 W. Arrow St., Marshall, MO 65340. Call us today at 888-349-0386.