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Duke Ponders The Question, "Should I Lease or Buy?"

duke

Hello California on this beautiful September day!  Duke here and for the most part when I decide to make a purchase, I buy.  Sometimes though I am not sure if I should lease it though especially when it comes to a vehicle.  So today we will tackle the question, Lease or Buy?  Which is better, maybe it depends on your needs, so let's get barkin' on this subject. 



Lease? Or buy? These are the options for Los Altos drivers. It's always a tough question for auto owners, but here is some info that'll help you make an informed decision.

If you buy, you'll pay the full cost of the vehicle, maybe an initial down payment, monthly payments on the balance that pays down the loan principal, and the finance charge.

Los Altos drivers who lease finance the portion of the cost of the vehicle that's used up during the term of the lease. You'll pay some money upfront: fees, security deposit, first month's payment, and maybe a capital reduction. The monthly payments include a depreciation cost and a finance charge. When the lease is up, you return the vehicle to your local Los Altos area dealership. 

So how do Los Altos drivers decide?

First, how much do you have for a down payment? A lease usually requires a smaller down payment.

How much monthly payment can you afford? Again, lease payments will be much lower for any given down payment.

A lease requires better credit, so that's a factor.

How long will you keep the vehicle? Los Altos drivers who keep their vehicles around for a while will pay less if they buy. But just two or three years? Then leasing is the way to go.

If your car might suffer a ding or two, like a work truck would, then buying's better. The auto leasing company will want their vehicle back at the lease end in tip top shape, and if repairs are needed, you'll pay.

How far do you drive in and around the Los Altos area? Important to consider because leases have a mileage limit; if you go over, you pay a hefty charge per mile/kilometer when the lease is up. So high mileage CA drivers should definitely buy.

Will the car be used in your business? Check with your accountant, but both financing options have different tax benefits, depending on your circumstances.

Over the short term, leasing is much cheaper. Medium-term, leasing, and buying costs are about the same. Over the long haul, leasing always costs more.

Leases may sound a bit complicated, and the typical lease decision weighs more on the monthly payment rather than price. So sometimes Los Alto's leasers may pay a higher purchase price than a buyer would.

Here is a tip: If the salesman asks if you'll be leasing or buying, say you're not sure yet. Make your best deal, then look at your financing options.

Here's another: With a buy or a lease, if you total the vehicle, you'll owe the full amount of the loan, or the balance of the lease payments. Usually, it's less than the vehicle's fair market value, and that's all your CA auto insurance company will pay. But ask your Los Altos agent about gap insurance, which pays the difference between fair market value and what you owe. A big consideration for a lease.

Remember, you have to return your leased vehicle in excellent condition and may need to do all the vehicle manufacturer's recommended service and maintenance or face penalties. So see your local advisor at your Los Altos auto repair shop or Allied Auto Works on a regular basis, get the required work done, and save the service records. It's well worth it.

 

Put aside all anxious thoughts and be at peace ~ St. Francis De Sales

Duke

 

duke

Allied Auto Works
2073 Grant Road
Los Altos, CA 94024
650.968.7227
https://www.alliedautoworks.com/

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