Deciding to lease or purchase your new vehicle
Once you’ve determined it’s time for a new vehicle choosing the type of car is not the only decision to make. Another important decision is to lease or to purchase.
There are many pros and cons to both, and the right decision is the one that makes the most sense for you.
Figuring out how much you can afford to spend each month is the first step. If you need the cheapest option available, monthly lease payments are generally more affordable than auto loan payments.
LEASING VERSUS PURCHASING
Buying involves higher monthly costs, but you eventually own your vehicle. A lease has lower payments and lets you drive a vehicle more expensive than you could afford to buy.
BUYING TO OWN
Buying a vehicle with a conventional loan is like purchasing a home: You borrow money from a bank, credit union, or other lending institution and make monthly payments for some number of years. A percent of each payment is put towards paying interest on the loan, and the rest is used to pay down the principal. The higher the interest rate, the higher the payment. You pay down the principal, building equity until the car is yours.
Since the car is yours, you can customize your vehicle the way you like and maintain it as often as you choose. It is always recommended to stick to the schedule of service in your owner’s manual. When purchasing, car warranties become valuable and Hyundai’s 100,000 mileage warranty is one of the most comprehensive in the industry.
LEASING TO GET MORE
If your main concern is the lowest monthly payment or driving a vehicle with the latest technology, leasing may be the way to go.
With the average car price now over $38,000 and buyers seeking features that are available only on newer cars, leasing has become a popular alternative. With a lease, you make a monthly payment to drive a new car for a set term, generally 3 years.
Leasing can appear to be more appealing than buying. Monthly payments are usually lower because you’re not paying back any principal. Instead, you’re just borrowing and repaying the difference between the car’s value when new and its expected value when the lease ends plus finance charges.
ADVANTAGES TO LEASING
Newer cars have less trouble and you’re usually covered by the manufacturer’s new-car warranty. Leases often include free oil changes and other scheduled maintenance. Hyundai’s 100k mileage warranty and 3 year free maintenance makes leasing and purchasing vehicles about even in this area. By leasing you don’t have to worry about the car’s trade-in value or selling it when it’s time to move on. You just drop off the car at any designated dealer. There can also be significant tax advantages for business owners to lease vehicles. Be sure to check with your tax experts for the most current tax laws regarding leased vehicles.
CONSIDERATION WHEN LEASING
You must consider the average amount of miles you drive when deciding to lease. It’s important to monitor your driving habits and ownership history because leases come with mileage restrictions. Going over this amount could cost you surcharges that average about 20 cents per extra mile. Also if maintaining your vehicle is not your strong suit, you may end up paying excessive wear and tear charges.
LONG-TERM VS. SHORT-TERM
If long-term value is your focus than purchasing your vehicle is the most likely path for you. For those who place importance on having the newest technology every few years, then consider leasing your new vehicle.
Whether you’ve decided to lease or purchase, Team Hyundai San Luis Obispo’s Finance Department can help you find the best terms and competitive rates. You can start your finance application right now. https://www.hyundaislo.com/finance/