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| Leasing versus Buying
an Automobile |
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To Buy or to Lease?
That is the question for
many car shoppers. With interest rates ticking higher, many
people are opting for the latter, with car leases up 21% over
last year. Now, here is how a lease works. The car is actually
bought by a finance company and the owner of the car, that
is, the person who keeps it and drives it, pays for the depreciation,
which is the dollar amount the car is expected to lose during
the lease period. That amount is divided into monthly payments
plus sometimes an initial down payment. One big incentive
to leasing is that it costs less per month than an auto purchase
loan, so you can get more bang, or car, for your buck. But,
if you decide to keep the car when the lease is up, it will
cost you more than if you bought the car in the first place.
Some tips to keep in
mind for a lease: Mileage limits and car prices are negotiable,
so try to strike a good deal, and dealerships can offer further
discounts. Not leases are advertised, so if you see a car you
like, ask about a deal, and definitely shop around. Compare
offers for the lowest monthly payments, up-front costs, terms
of the lease, mileage, drive-off fees, and interest rates. And,
it is not a good idea to plunk down a big down payment since
leasing rates are already pretty low. Weigh all of these factors
before you make a decision.
In summary mind these
3 points:
•
Negotiate mileage and
price
•
Shop around and compare
offers
•
Limit your down payment
Carrie Lee reporting
for CNN News
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