If you are in the market for a new or pre-owned vehicle you have a lot of decisions to make. Do you prefer a sports car, a minivan, four-door sedan, truck, or SUV? What color and options do you want? However, one of the most important decisions you will make is how you will finance your vehicle purchase.
You basically have three choices: You can finance the vehicle purchase; you can pay cash; or, you can lease. Whichever option you choose will be based on a number of factors, such as your credit worthiness, your driving habits, and your lifestyle.
Here at Rick Case Hyundai Duluth, your preferred Hyundai dealership in Duluth, GA, it’s our goal to make your buying experience pleasant, easy, and hassle-free. That’s why we’d like to provide you with the following information which explains the key pros and cons between buying and leasing a vehicle; since these are the two most common avenues people use when buying a new or used car.
Benefits to Buying
If you are someone who likes to own something and keep it for a while, then buying a car may be the right choice for you. Once you pay your car off, you own it outright. Not only will you be saving the monthly payments, but you won’t have to worry about lease mileage restrictions, either. Plus, if you like to customize your vehicle, you’ll be able to do so without worrying about returning a leased vehicle to the dealership in its original condition, minus normal wear and tear. You’ll also have the satisfaction of knowing that car in your driveway is yours for as long as you want to keep it. Buying a car is also great if you plan to pass it down to your kids when they are ready to drive.
Drawbacks to Buying
Equity is an important concept when thinking about buying a car. When you first purchase a vehicle, it loses some of its value over time. Of course if you choose to keep the car, this is not a problem. But it is if you decide to use your car as a trade in, you may find yourself in what is called “upside down” in the vehicle. This is also known as having “negative equity,” which may result in you having to come up with the money cover the difference between what your trade-in is worth and the amount being financed on your new car. In some cases, you could negotiate to roll the negative equity of your old car into a new car loan. However, this will increase the amount financed and affect your monthly payments.
Another point to consider is that with straight car loans you may be required to put more money down. Generally speaking, banks or lending institutions want from between 10% and 20% of the vehicle’s purchase price as a down payment. In addition, your credit score will determine the loan’s interest rate which will also affect your monthly payments and the total amount you will have paid for the car at the end of the loan.
The Benefits of Leasing
When you lease a vehicle, you are essentially “renting” it from the dealership for a set amount of time. But with a lease, you are actually paying the difference between the car’s sticker price and what the anticipated value it will be at the conclusion of the lease. Here’s an example: Let’s say that the MSRP of your new car is $25,000 and you decide on a three-year lease. We’ll assume that the theoretical residual value of your vehicle is 60% of the original purchase price. That means this particular vehicle would be worth around $15,000 at the end of the lease. Your monthly payments would therefore be calculated on the remaining $10,000 instead of the full $25,000. What this means is that you may be able to buy a lot more car for the money.
Just as in a purchase, your monthly lease payments will also be affected by how much cash you are willing to put down. Car dealerships often run special promotions which sometimes offer $0 down and $0 due at lease signing. However, these offers could result in a higher monthly payment in the long run.
Another benefit to leasing is the warranty. Most manufacturer warranties these days will cover you for three years or 36,000 miles bumper-to-bumper. If you opt for a three-year lease, which is the most common, you don’t have to worry about anything major going wrong with the car. However, you are still responsible for all routine maintenance, such as oil changes, as specified in your owner’s manual.
If you are someone who enjoys that “new car smell,” or if you like getting the newest car with the latest technology every couple of years, then leasing may be for you. And, if you don’t want to bother with trading your car in and dealing with such things as trade-in value, you can drop the car off at the end of the lease and get another one. If you decide to keep your car, you still have the option of refinancing the balance owed and converting the lease to a purchase.
Just like buying, there are many benefits to leasing a vehicle. But there are also some drawbacks you should take into consideration, like mileage caps. Depending on how much or how little you drive will determine whether or not you will stay at or under the lease’s mileage restrictions, which can range anywhere from 9,000 to 15,000 miles per year. Exceed your mileage cap and you’ll be hit with expensive overage fees per mile.
Not building equity in the vehicle can also be a negative for some people. When you buy a car, you build equity in it just like you would a house. However with a lease, you are essentially “renting” the car, so therefore you aren’t building any equity at all; again, much like renting a house. Additionally, dealers may require you to provide a large amount of money up front which will lower your lease payments. You also must have excellent credit to qualify for a lease as well.
Shopping at Rick Case Hyundai Duluth is the Best Decision You’ll Make
Whether you decide to lease or to purchase your next vehicle, the best decision you can make is to buy it from your friends at Rick Case Hyundai, Duluth. We’re proud that Rick Case Automotive Group was chosen over 17,000 privately owned dealers across the country as America’s one and only “All-Star Dealer” by Automotive News Magazine. It means that you can rest assured you’re getting the best deal on a new 2015 Hyundai. Plus, only Rick Case doubles the nationwide factory warranty on all new vehicles and gives you a 10-year/100,000 mile nationwide warranty with 10 years of roadside assistance on pre-owned vehicles. Stop by our dealership, serving the greater metro Atlanta area, at 3180 Satellite Blvd. NW, Duluth, GA 30096. To contact either our Sales or Service departments, please call 855-975-9695.