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S P I R I T O F W O M E N W I N T E R 2 016 w w w. s p i r i t o f w o m e n . c o m
F I N A N C I A L F I T N E S S
SHUTTERSTOCK
SAFETY FIRST
Financial considerations may take a back seat to safety
for some drivers, however, giving leasing the edge.
"The biggest advantage to leasing is that you're driving
around in a newer model vehicle … and with that comes
the latest safety and technology features, and better fuel
economy typically," says Stockburger. With the speed at
which technology is being upgraded these days, new
features can become obsolete much more quickly than in
the past, she adds.
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D
espite what an overzealous car seller
might tell you, there's no right or wrong
answer to the question of whether to lease
or buy your next car.
Instead, it's a question of how you'll be
using the car, how much money you have to spend,
and intangibles like the enjoyment of having a new car
more frequently, says Jennifer Stockburger, director of
operations for Consumer Reports' Auto Test Center in
Colchester, Conn.
MONEY MATTERS
If coming out ahead financially is your top priority, your
best move is to buy a car and "keep it till the wheels fall
off," says Stockburger. "In most cases, it actually costs you
more [overall] to lease."
Leasing, however, does offer a cash flow advantage if
you can't afford the monthly auto loan payments for the
new car you want, since monthly leasing payments will
be lower. "There can also be tax advantages to leasing
[for some people]," says Stockburger.
But leasing can cost you big time if you drive more than
12,000 miles a year, cautions Stockburger. "Cars lease
with mileage limitations, and if you exceed that, you're
typically paying some very hefty per-mile fees," she says.
How it works
LEASING
Up front, you will usually pay a down payment, refundable
security deposit, taxes, registration and other fees, along
with the frst month's lease payment. Most leases are set
up for two to four years, with penalties for ending the lease
early, excessive wear and tear, or exceeding the specifed
mileage limits for the car.
BUYING
Up front, you will usually pay a down payment or cash
(if you're not taking out a loan), plus taxes, registration and
other fees. If you have a car loan, you'll make a monthly
loan payment until the loan is paid off. You'll be free to drive
as many miles and maintain the car as you want to, and
you will reap the results of your decisions—for better or for
worse—when you decide to trade in or sell the car.
CAR TALK:
Should you
lease
or buy?
In most cases, it actually costs you more
[overall] to lease.
~ Jennifer Stockburger,
Consumer Reports
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