CARried Away
"That's a nice looking vehicle you got there" has never been my mindset; I notice shoes, a purse, a new pair of spectacles. But a car? That's one for the boys, or at least those girls who know the difference between a Honda and a Hummer.
But recently, a need for speed has been on my mind. Don't get me wrong, those pre and post-work powerwalks are invigorating, but maybe it's timing or just general right of passage vibes, but suddenly I wanted a vehicle of my own.
JAM OUT TO THIS SONG ;)
From the gecko (not Geico, the insurance conundrum is a whole other article, but I will share what I learned here). I knew there are options.
I could buy a car entirely (wishful thinking), lease a car, purchase a car from that dealer guy who promises the funny noise the engine makes is just "gas," or finance a car, like a 2020 from a reputable financing place or even through the bank.
Because I don't make any decision without research, I'll let you know what I've learned!
Leasing a Car: Leasing a car is like renting a space. You're making monthly payments towards its depreciation, and at the end of the day, you are entitled to purchase, e.g., the car "space"; you're renting the rights to drive the car, typically for a 36-month term, and allotted an average of 10,000-15,000 mileage. If you're a real driver, you'd need to have more mileage included in your original package. I thought I was a smart-aleck by asking one of the many "best in the biz" lease guy's about the cars purchase option, meaning, if I lease a 2020 vehicle that retails for $23,000 at the end of three years - my monthly payments + the depreciation of the car, I should be able to buy it fully for around $12,000, correct? "No," he explained, because banks encourage this whole cycle of leasing, returning, and leasing again (better revenue), the cars are more expensive than should make sense at the end of the term. Interesting, I thought. It reminds me of all those business models where the user is encouraged to purchase the upgrade accouterments to continue use.
There are benefits to leasing, of course-
Short-term cost advantages to leasing.
The monthly payments on a leased car are usually less than on loan – even for a luxury model. e.g. $500 versus $225. The down payment usually works out to be less than what you would pay for a bought car as well.
Because the typical lease is for three years, most repairs are covered by a factory warranty. Sales tax is cheaper too, as you only pay it on the financed portion. Make sure to ask about the $5,000 damage waiver- essentially where you pay around $500 and wear and tear from French-kiss car knicks are covered by the company.
An attractive feature of leasing is the ability to drive a new car every few years. You never have to go through the hassle of selling it; you turn it in at the end of the term.
Purchasing a Car From a Dealer: This is where knowledge is power. Before entering an agreement with a reputable "car salesman," know what's out there and the industry going rate. Purchasing a vehicle is not the "taken for a ride" you are looking for. It's a very he said she said industry, everyone knows you're shopping around, and the way car dealers make money is through the financing; if you come with a pre-approved offer from your bank, (bonus tip is to keep your credit score good for the months prior) this will already keep the dealer's offer in check. Also, speak to your insurance agent before deciding on a make and model. Some cars (hard to replace parts, fencyyy models) will hike up insurance more than the everyday Toyota. Often, dealers will try to make their overstock inventory more attractive by offering add-ons or better financing; this applies to purchasing a car and a lease (Hyundai Elantra 2020 vibes, anyone?) While sometimes there's nothing wrong with an overstock, it could merely be a dealer who anticipated great sales to a quality car; be wary if you keep hearing the same model over again. Suppose you want your quirky Porsche or Stang' the dealer's influx is not your problem.
Purchasing a vehicle is not the "taken for a ride" you are looking for
Financing a Car: A car is the opposite of an investment, if anything because it loses value as soon as you hit the peddle. So the last thing you'd want to waste is money on interest. As mentioned before, being equipped with your credit score, especially a good one, should help with your rates- calculate what works for you; the shorter the term loan, the less interest; however, the more you layout each month. Be wary of someone negotiating a cheaper monthly rate; this could merely be a swindle tactic for a longer payout term. Not everyone is out to get you, though; some car salesmen are just doing their jobs.
Here are benefits to Purchasing/Financing,
Long-term cost advantages to purchasing a car
You'll save money over the long term if you buy a car.
You can drive as much as you like. There's no excess mileage penalty.
You have more flexibility since you can sell the car whenever you want.
You can use the car as a trade-in on the next vehicle you buy.
YOU OWN A CAR.
I don't want to scare you, but I see that this whole ordeal's real determining factor is auto insurance. Because while all these options are short-term overall, auto insurance is constant, which can be pricey, especially until your 25, taking the defensive driving course will alleviate some of the rate.
Main thing always is, drive safe, life is about the destination AND the journey.
