Image courtesy of Pixabay

 

My wife and I really do love the cars we have. They serve their purpose of getting us and the kids from point A to point B. I drive a 2010 Nissan Altima and my wife drives a 2009 Hyundai Santa Fe, each of which were financed over a 6-year term (in 2015 we were able to pay off my wife’s car early, which made us very happy….Woo Hoo! One less debt!). Also, we purchased each car used, which does save a ton and still gets us a great value. When getting a car, there are a few options available in order to get those keys in your hand; purchase it outright, finance it through a bank (or dealership) or lease it. Each of these options has their perks and I would like to discuss my take on them.

Purchasing Outright

In my opinion, the best of these options is to purchase a car outright. I have done this with numerous cars in the past although they were older, lower end cars because that is what I could afford. The obvious reason why this is a great option is because once the car is purchased, you are free of monthly payments, free of being charged interest and perhaps can even score a lower cost insurance option.

The downside to this, however, is that you need to be able to save up enough cash to purchase the car, which can be daunting. In order to do this, it may mean buying a car that costs less than you initially wanted to spend. Additionally, this may also mean purchasing a car that has more miles or may need some work, which would reflect a lower price. However if you can find a great deal on a great car or perhaps you are a mechanic or have a friend or family member that is, even having to spend money to fix up a car may  be worth it in the long run. There are more upfront costs, but even time you turn the ignition and hear the roar of the engine, you know that it is all yours.

Financing

Since both of the cars we have were financed, I know firsthand how great it feels to roll up at home in that new (or new to you) car that just came from the dealership. The cleanliness, the new car smell and the purr of the engine give us a satisfying feeling. We may go for a joyride to “break-in” our new chariot. However, for me at least, this feeling wore off about a month later when that first car payment came due. Reality set in with that gentle reminder that I need to send in that check each month.

The good thing is that by spreading the cost out over 5 or 6 years, the monthly payments are low and affordable. It certainly seems like a great trade-off for what you now have parked in the driveway. Also, for many of us, financing a car is the only way to be able to get a nicer car that is reliable. In the long run, it may be worth it, especially if you are able to keep the car for 10+ years. But in the end, it is still a debt and can be draining.

Leasing

Personally, this is my least favorite option. I know that there are many people who love to lease their cars and do find great value in it. For me, however, I avoid this option at all costs. What it really boils down to is that a car is a depreciating asset. When you lease a car, essentially what you are doing is paying a monthly fee for the right to drive the car and park it in your garage or driveway.

The good thing about leasing is you are able to get a new car every 2 to 3 to 4 years, which can be a great feeling (see above). However with this option, the car is never really yours. You need to be conscious of the miles you put on it and repairs and maintenance are still your responsibility. If having a nicer car is what is most important to you, this is a great option. However if you want to save the most money and get a great feeling of true ownership, the previous two options above would be your best bet.

My Experience with Leasing

Before my wife and I were married, we had leased a car. This happened right after she had been in a car accident, which totaled her vehicle and she needed a car quickly. At the time, this lease was the most economical option given the situation. The funny thing is that the dealership did not call it a lease, but rather a “smart buy”. Oh how I now laugh at that term.

We used this “new to us” leased car for everything. It was a SUV and was great to haul stuff. In fact, this was the car we used when we drove cross-country and moved to California to finish school. We also used this car to drive back home to Illinois after 3 years. When we got the letter in the mail that the lease was going to be up, I remember thinking to myself “lease?”. We went to the dealer and unsurprisingly we were over the mile allowance…by a lot! I suppose that is what two cross-country trips will do. Oops.

The mileage fee to return the car was going to be more than the cost of a new car! I couldn’t believe it! At the time we lived in Cali and were using the car, I never even knew that there was a mileage allowance. Boy did this all surprise the hell out of me! Yeah, this was surely not a “smart buy”!

Luckily we were able to work out a deal with the dealership and the mileage fee was able to mostly be waived. We traded in the car and financed the car that my wife now currently drives. I felt like I dodged a bullet on that one. But after all this, leasing (“smart buying”) left a bad taste in my mouth.

 


With the experience I have had with car purchases, going forward I plan on being able to purchase cars outright. This is going to take A LOT of work and diligence with savings, but in the end I think it will be worth it. These separate experiences taught me a lot about what to look for when getting a vehicle so that in the future, I can make the most educated decision possible.

What has been your car buying experience? Do you prefer the lease option? Do you purchase your cars with cash? I would love you hear from you and get your thoughts. Please comment below. As always you can also reach me directly at defeatingnormal@gmail.com.

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