Should you purchase or lease a vehicle?
On the one hand, leasing allows for smaller monthly payments and the opportunity of changing vehicles more often, however, you are constantly paying.
On the other hand, purchasing can also be a good option, if and only if, you intend to keep the vehicle for at least 6 years, in order to avoid the accumulating of any unpaid residual amount on the original car loan.
Remember that regardless of any sales pitch made by the dealer, the rule of thumb is simple: Over a 10-year period, the more often that you exchange the vehicles, you will pay more with respect to the cost of depreciation of the new car.
Transportation costs are the second largest expense item in any budget. As such, it is more “advantageous” to reduce a $600 expense item by 15%, as compared to an adjustment of a $50 expense item.
When it comes to cars, dealers will try to sell you a dream. The special colours (extra), the new-gen mags (extra), nice-to-have but non-essential options (extra), more powerful engines (extra) as well as greater gas consumption. Too often, a vehicle becomes the measure of one’s success, with an inclination to pay too much for something that, fundamentally, is a means of transportation, to take us from point A to point B.
Remember one thing, the car will always be an expense, and not an investment. Small compromises and sacrifices can save us a lot of money in the long run.
We conclude with these 2 pieces of advice
- If you purchase and finance a vehicle, be sure that to keep the vehicle for at least the duration of the car loan. Never transfer an unpaid balance of a car loan, ie., the balloon payment, onto a new vehicle, as you will end up with significantly larger car payments that will haunt you for many years to come.
- If you have no choice but to avail yourself of a “ 2nd or 3rd ” chance credit offer, here are some things that you should to aware of in order to avoid certain pitfalls :
A sale price much higher than the market value;
– Incidental expenses (warranties and protection packages of all kinds, etc.) that are as numerous as they are expensive;
– For a lease contract, significant charges for excess mileage or a very low base-mileage allowance;
– Weekly payments that appear to be small, so as not to show the extent of payments on a monthly basis; and finally,
– A much too-high interest rate.
Balance Your Budget
Track your spending in order to successfully manage your financial priorities.
Loan Payment Calculator
Use the loan calculator to determine the monthly cost of a loan.
Can I solve my financial problems without losing my house or my car?
Yes. The first option to consider, when experiencing financial difficulties, is to make a budget.