Need a New Ride?

Summer’s here!  Who’s ready for a road trip?  A vacation?  A day trip?  How’s your ride these days?

Summer driving can be just as hard on your car as winter driving.  Between the hot temperatures, hot pavement, and the additional driving we tend to do in the summer months, you might find that you need to trade in your old ride on something a little more reliable.  But, before you even think about driving down to that car lot, you might want to consider how you’ll finance that new set of wheels.  In case you haven’t already figured it out, the car dealership isn’t always the best place to finance a new car or truck.  In fact, unless you have excellent credit, it could be the worst place you could go when you need a car loan!

Did you know that dealerships often get referral fees for steering customers to certain loan companies?   Those fees nearly always get passed on to the customer in one way or another.  And sometimes the interest rates that they offer you aren’t always the best interest rate available!   Not to mention the payments those higher interest rates can mean!  What should you do?

Before you go to the car lot, before you pick out that new (or even just new to you) vehicle, know your options!  Know what you can borrow, know what you can afford, and know what you’ll pay!

Just like you shop around for the best credit card offers, you can also shop around for the best car loans:

Should You Lease a Car?

At one time, leasing an automobile was just as popular as actually purchasing an automobile, but then the auto industry changed and purchasing once again became the norm.  Recently, however, leasing has once again become a popular option when thinking about the acquisition of a new car, truck or SUV.  But, what does leasing really cost?  And more importantly, is leasing an option you should consider?

Although the term leasing technically means renting, there is a huge difference between renting a car for a week to go on vacation and leasing a car that you’ll be driving for anywhere from two to five years.  You see, when you rent a car, you pay a daily or weekly rate that a lot higher than the rate you’d eventually pay when you lease a car, and with a rental, you don’t carry the car on your personal insurance plan for the time that you have the car.  But with a leased automobile, you are required to carry insurance on the vehicle just as if you were the owner.

Still, there are some areas where you can negotiate a bit:

  • Price:  Just as you would negotiate the price of a new or used vehicle, you can and should negotiate the best price that you can with the automotive dealership.  Just because it’s a lease doesn’t mean the dealer doesn’t have a little “wiggle room” built into the price.
  • Interest:  Although you won’t actually own the car when your lease is up, you will have to pay interest on the lease just as if you were financing the car, and the interest rate is based on your credit score, so the lower the interest rate, the lower your payment will be.
  • Due at Signing Fees:  If you’ve ever paid attention to the fine print on those auto leasing commercials, you couldn’t have missed the phrase “Due at Signing” with a dollar amount that is usually about three thousand dollars, sometimes a little more, sometimes a little less. Similar to the down payment when you buy a car, these “Due at Signing” fees are used for dealer prep/document fees, acquisition fees, administrative fees, transferring the title, registering the car, and paying a portion of the property taxes.  They are somewhat negotiable, so don’t be afraid to haggle a little bit with the dealer.
  • End of Lease Fees:  In addition to a disposition fee once the lease term is up and you return the car, there may be other fees and charges that may be assessed, including excessive wear and tear, dents and scratches in the finish, rips in the upholstery or carpet, and other issues that may lower the residual value of the vehicle.
  • Mileage:  When it comes to leasing a vehicle, this is one of the most important factors to consider before you sign on the dotted line.  Every lease has a set mileage limit (typically 15,000 miles or so) and in the event that you go over your allowed mileage, you can and will be charged per mile for the overage.  While this limit is negotiable, it may or may not be a deal breaker for you personally, so pay attention to the number of miles that you normally drive per year and make sure that you allow adequate mileage when negotiating any lease on any vehicle.

Does the idea of leasing a vehicle appeal to you?  Many people like the concept of leasing because it means they get a new vehicle every two or three years and because the payments are typically a little lower than they would be if you were to purchase the vehicle.  Other people don’t like the concept of leasing because at the end of the lease you don’t actually own anything whereas if you were to purchase the vehicle, at the end of your payment terms, the vehicle is yours and would have some value.  Essentially, the decision to lease rather than own is entirely up to you.