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Should I lease my next vehicle?

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Leasing vs. Buying

When it comes time to buy a new car, one of the main questions you’ll need to ask yourself, “Should I lease my next vehicle?”  Don’t believe someone you know who had 1 bad experience with leasing.  Do your research, crunch the numbers, and make your own decision.

 

Reasons for purchasing a brand new (never owned) vehicle

Forget leasing vs. buying for a second.  Start by understanding the reasons why you want to purchase a brand new vehicle in the first place.  Here are some common reasons people go new:

  • Less repairs
  • If repairs are needed, new vehicles have a warranty
  • Get the most up-to-date features
  • Less risk—even though used cars are cheaper, they carry more risk of repairs & breakdowns
  • Get exactly what you want—you have a choice of color, options, and, therefore, price with a new vehicle. Used vehicles are limited by what’s available.
  • No need to research previous owner/accident history
  • Choice of where you buy—with a used car, you’re locked in to buying where the car you like is
  • New car smell—no previous messes, stains, smells, dog hair, etc.

 

These are just a few of the most common reasons.  Now, let’s also forget the words leasing & buying.  Both of them are just ways to pay for a car.  Most owners want a specific car at the best possible value.  Period, end of story.  So, do your research & figure out how much leasing will cost you per month and how much purchasing will cost you per month.

Who shouldn’t lease:

Ok, it’s easier to explain what customers shouldn’t lease.  If you don’t fall into the categories below, you are a leasing candidate.

  • People who want to drive a car for 10+ years
    • This person is better off buying a brand new car with the maximum length/mileage service contract available and taking a loan on it for as long as possible. So, pretty much an 84 month loan + a 10 year/150,000 mile service contract.
  • People who drive well over 20,000 miles per year
    • Extreme high mileage drivers are also better off “keeping it until it dies” and maxing out a service contract.

Ok, if you fall into 1 or both of the above groups, stop reading now.  Still with me?  Good.

Stick around for Part 2 of this blog where we dive deeper into how you can decide whether leasing is right for you.

Getting the Most Out of Your Trade

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When the time comes to buy your next vehicle, surely one of the main factors in your buying decision will be the value of your trade-in.  Here’s what you can do to make your trade-in as appealing as possible to dealers:

  1. Know your buyer–you think of your car as a trade-in towards something newer, cleaner, better.  The person appraising your car at a dealership thinks of your car as a piece of inventory.  Try to look at your car through a buyer’s eyes and ask yourself what would appeal to a buyer, specifically, a buyer whose intention it is to re-sell the car for a profit.
  2. Address any obvious issues–check engine lights or ABS lights are going to be a red flag.  They introduce an uncertain situation for the appraiser.  Will it cost $100 to fix or $1000?  Experienced appraisers draw from experience to play the odds.  If there’s a light on your dash, the odds are it’s because you brought it to a mechanic and the cost to repair it was high enough that you decided to trade instead.  Understand that if there’s a light on the dash, an appraiser is going to guess on the high end when estimating cost to repair.  If possible (and affordable), get these issues fixed before you try to trade-in your vehicle.
  3. Get your vehicle detailed–we’re all human, even the person appraising your vehicle.  An immaculately clean car is going to be valued, literally, $100’s of dollars more than a dirty one.  If you have kids, this is especially true.  Sure, the dealership’s job is to detail the car before they resell it.  But your job is to get the maximum value out of your vehicle.  Whether you detail it yourself or pay a professional, a clean car will make the initial offer higher plus give you a bargaining chip to use later.
  4. Be honest–the person appraising your car is just that–a person.  Treat them with respect and they will do the same.  You don’t have to volunteer information, it’s the appraiser’s job to ask questions for clarification.  But if they do ask questions, answer them honestly.  Everyone at the dealership wants you to buy a car–it’s how they make their living after all–and they’ll do everything they can to help you.  If you don’t feel like they are being respectful or helpful, then see #5.
  5. Buy where you are comfortable–it’s easy to get hung up on price.  Try to remember that you are making an investment–in the car, in the salesperson, and in the dealership.  Did you like your salesperson?  Did you like your appraiser?  Were they friendly?  Did you trust them?  Will you be comfortable walking into this store for service over the next 3-5 years?  Look, you shouldn’t have to pay $1,000’s of dollars to buy at a place where the people are nice.  But you might want to consider paying a few hundred dollars more to buy a car from people you like, trust, and want to see again.