Leasing or Buying: Which Option is Right for You?

7bd1bc52cf0bc328b576_DSC_4794.jpg
7bd1bc52cf0bc328b576_DSC_4794.jpg

What’s the best route to acquiring a new and reliable set of wheels? Choosing the make and model of the vehicle you wish to drive, as well as other factors like amenities and mileage are important. However from a financial standpoint, one of your most important decisions is whether to lease or buy. Like many financial decisions, there are pros and cons to each option, so consider the following before signing on the dotted line.

Leasing a car

When you lease a car, you generally make an up-front payment and agree to make monthly payments for a new car over a defined period of time. Lease payments cover the vehicle’s estimated depreciation (how much value the car loses during the time you own it) and finance charges, but they do not help you build equity or ownership in the vehicle. Most lease agreements have an annual mileage limit, and you may incur a fee if you drive more than the amount allowed. Calculate your annual mileage from the last few years so you can negotiate a limit that fits your lifestyle. With an open-end or equity lease, you agree to purchase the vehicle at a predetermined price at the end of the lease. With a closed-end lease, you can walk away from the car once any outstanding fees are paid.

Sign Up for E-News

Advantages

Leasing allows you to drive a new car every few years with lower monthly payments and occasionally, with no down payment. When the lease ends, you don’t have to worry about finding a new owner for the car. In many cases, if your car requires maintenance or repairs the costs will be covered by a manufacturer’s warranty.

Disadvantages

Despite offering more affordable monthly payments, leasing rather than buying a car will cost more over time. This is because you won’t be able to sell the car and recoup some of your costs when the lease is up. Additionally, you’ll pay the car’s depreciation when it is at its highest (in the first few years of ownership) and the newer vehicle may be more expensive to insure. Keep in mind that you may be charged a penalty if you want out of the lease early.

Buying a car

A big factor to consider when you buy a car is how long you intend to drive it. Knowing your length of ownership will help you prioritize various features, such as the mileage or model year you’d like to purchase. Keep in mind that if you’d like to eventually sell or trade-in your vehicle that some cars hold their value better than others. Regular maintenance and careful driving can help retain your car’s resale value.

Advantages

In the long run, buying a car is generally a better bargain than leasing, assuming you keep the vehicle for several years after the loan is paid off. This is because you will own the car and be free of monthly payments at the end of the loan. If you finance a used car rather than a new one, your potential savings are even greater. Buying gives you the flexibility to keep the car or sell it at the end of the loan. You also have the freedom to drive as many miles per year as you like (although high mileage does affect resale value).

Disadvantages

Buying a car typically costs you more up-front, in the form of a down payment. While this amount is negotiable, its size will affect the amount you pay in interest and the length of your loan. As a car owner, you are responsible for repairs, which may add up over time.

Making the decision

Think about your financial circumstances and preferences when you’re deciding which option – leasing or buying – is right for you. Find a reputable car dealer and ask questions before closing the deal. Compare specific offers with an online lease or purchase calculator, which allows you to plug in actual lease or loan terms. Ask your financial or tax advisor to help you assess the impact of buying versus leasing a car on your financial situation.

 

Armando DiRienzo is a Financial Advisor and Vice President with Metzger, DiRienzo & Associates, a financial advisory practice of Ameriprise Financial Services, Inc .  He offers fee-based financial planning and asset management strategies and has been in practice 17 years. To contact him call 973-549-6702, 200 Campus Dr. suite 150 Florham Park NJ, 07932 or visit www.mdflorhampark.com

Investment advisory products and services are made available through Ameriprise Financial Services, Inc., a registered investment adviser.

Ameriprise Financial Services, Inc. Member FINRA and SIPC

 

© 2016 Ameriprise Financial, Inc. All rights reserved.                           

The opinions expressed herein are the writer's alone, and do not reflect the opinions of TAPinto.net or anyone who works for TAPinto.net. TAPinto.net is not responsible for the accuracy of any of the information supplied by the writer.

TAP Into Another Town's News:

You May Also Be Interested In

Sign Up for E-News

East Hanover/Florham Park

Hanover Park Wrestlers Place First at Districts

February 18, 2018

EAST HANOVER, N.J.- Congratulations to Hanover Park Wrestlers for taking first place in the districts. Eight hornets took first place;

Joey Olivieri 
Jake Bursese 
Dom Merola
Dom DiFrancescantonio 
Nicky Raimo
Mike rubin
Sean Conley
Matt Liberato 

Dan Jiminez placed second, Nick Zarra  and Sebastian Bassolino both placed third. Next up for ...

Travel Spotlight - Another Holiday, Another Encounter with Marine Life along Jersey Shore

February 19, 2018

SPRING LAKE, NJ — In neighboring Spring Lake, a baby seal made its way onto the beach near the north end pavilion early this afternoon.

Photographer Nancy Orlowski discovered the harbor seal pup near the jetty situated just south of the pavilion on Ocean Avenue at Ludlow Avenue.

The seal’s Presidents Day appearance on February 19 comes one day after a whale was spotted off the ...

Decades Rewind Returns to the Jersey Shore

Decades Rewind transports their audience to the 60’s, 70’s and 80’s!!

RED BANK, N.J.- Returning to the Count Basie Theatre, Friday, March 9th, 2018 Decades Rewind, the national touring concert, dance party and theatrical performance all wrapped up in one blockbuster, high energy show, celebrates the hits of the 60’s, 70’s and ...

Travels Spotlight - Coast Guard Ends Search for Fishermen Lost at Sea, Fund Established to Help Family

TAPintoTravels is here to promote travel whether it is for work or pleasure.  Most of our reporting is fun and helpful.  However on rare occasions, we do have to report on heart breaking stories.  It is always hardest when it involves men with families that have been lost at sea.  Please consider assisting this family in need and keep them in your thoughts or ...

Travel to Belmar for Chance Glimpse of an Adorable Baby Seal

TAPintoTravels — All eyes will be on everyone’s favorite groundhog today, but it was a baby seal that stole the spotlight yesterday at the Belmar marina.

During the morning of February 1, borough public works employees were working at the marina’s boat ramp when they noticed the gray pup sitting on the jet-ski dock, said Ed Markey, who works in the department and also ...

AtlantiCast

AtlantiCast: Episode 12

On this week’s episode of AtlantiCast, decade of excellence makes headlines, as Atlantic Health’s place on Fortune Magazine’s 100 Best Companies to Work For List leads off the newest episode of AtlantiCast. Also on this week’s show, check out the newest “hybrid” operating room at Morristown Medical Center and find out how Atlantic Health is helping local ...

AtlantiCast Medical Minute: Atlantic Orthopedic Institute’s Scoliosis and Spinal Deformity Center

On this episode of the AtlantiCast Medical Minute, we’ll take you inside the Atlantic Orthopedic Institute’s Scoliosis and Spinal Deformity Center, with the center’s director, Jason Lowenstein, MD.

Video Link: https://www.youtube.com/watch?v=1M7euCp86-c

AtlantiCast Episode 011

Breaking Atlantic Health System news on this week’s AtlantiCast! Plus, find out why Morristown Medical Center is one of the best hospitals in the nation when it comes to recovering from joint surgery, see the newest center for fighting brain cancer and an Atlantic Health System red-carpet premiere!

 

Upcoming Events

Carousel_image_48120e9b65ba8f8f5775_requiem_art_no_text

Wed, February 21, 7:00 PM

Chatham United Methodist Church, Chatham

Mozart Requiem - CHS Choirs & Chamber Orchestra

Arts & Entertainment

Carousel_image_aad5bb0a6b21207aa8dc_58dbe121e4b0d00ef04eec09

Fri, February 23, 12:00 PM

CycleBar Livingston, Livingston

Free Rookie Rider Classes at CycleBar Livingston

Health & Wellness

Mon, February 26, 1:30 PM

Livingston Public Library, Livingston

Monday at the Movies: WILD OATS

Arts & Entertainment

This Year's S.T.E.M. Fair at Brooklake School Was Their Biggest, So Far

February 18, 2018

FLORHAM PARK, N.J. - On Tuesday, January 9, Brooklake Elementary School in Florham Park hosted their annual S.T.E.M. fair.  According to principal, Dr. Steven Caponegro, it “had the most participants recorded, approximately 90 students.”

The fair was coordinated by Mr. Chris Perruso, who is the fifth-grade science and math teacher. In order to be a part of the fair, ...

German Language School of Morris County Raise $1,000 for Market Street Mission

February 19, 2018

February, the month of all things red and romantic with red, hearts, roses, and chocolates, is also a time to show our love of friends and community. Students from the German Language School of Morris County (www.njlearnsgerman.org and www.glsmc.org), took that lesson to heart and raised $1,000 for The Market Street Mission (www.marketstreet.org), a Morristown haven for the needy for more than ...