Lease vs. Purchase: What's the Best Way to Get a New Car?

We all know that when we walk into a car dealership, we have the option to purchase a car or to lease one. But what's the difference? What should you do? Leasing will save you money on your monthly payments. Purchasing will turn your car payments into an investment. Both the options to lease and purchase have their advantages and disadvantages, but what will work best for you? We're here to help give you a brief explanation, that way you can make a better-informed decision during your next car dealership experience.

Leasing:
When you lease a vehicle, you're essentially renting the car. You make your monthly payments, and you are able to continue driving your ride. Lease payments are lower than the payments on a vehicle purchase, since you are not moving toward owning the vehicle outright. A typical term for a lease is 36 months.

At the end of the lease term, you have a few options:

• You can turn the car in, and find a new vehicle. 
• You can sell the car, and perhaps make some money.
• You can turn the lease into a purchase, and begin making monthly payments.

One should be careful about the amount of driving they do with a leased vehicle. Leases come with a mileage agreement. While the standard amount of annual miles allowed for a lease is 12,000, you are able to take a higher mile allowance for an increased monthly payment. Be careful, because if you have more miles on the odometer than the agreed upon amount, you will be charged by the mile--usually a steep price that you'll want to avoid. 

The most common route consumers who lease their vehicle takes is to turn the car in and find a new vehicle. In some circumstances, you'll find that the value of the vehicle is higher than the residual value given at the time of the lease agreement. Residual value is the amount a car is projected to be worth at the end of the leasing term. When the actual value of the car is higher than the residual, you can sell the vehicle for the higher price and make the difference between the selling price and the residual. For example: if you have a residual value of $16,750, but are able to sell the car for $18,500, you just made yourself $1,750. Cars that have an easy time holding their values are promising for drivers looking to make this extra cash. And if you really like the vehicle and would like to continue to drive it, you can begin to make monthly payments toward the residual value. 

Leasing a vehicle can be a great option for people who are looking to save some money and like to switch vehicles often. Every three years, you can park a new, shiny vehicle in your driveway. But keep in mind, the payments you are making aren't working toward paying off a vehicle you will own. If this seems like a fitting option for you, come visit us and we'll help you get started!

Purchasing:

There are a couple of ways to purchase a vehicle. You can pay cash, up front, and have no monthly payments. This is the cheapest way to buy a car, if you have the money to lay out. You will avoid any interest fees, and become an instant owner. If you don't have the money to lay out, you can finance a new vehicle. When you finance, you will make monthly payments until the balance of the car is paid in full. The average loan for a car is 60 months, although 72 months is becoming more popular. The less months you finance a vehicle, the lower the payment... and vice versa. Your finance rate will be dependent upon your credit score. 

Those looking to get into a vehicle they intend to keep for years on end will find that purchasing a car is a better route than leasing. If you like to switch vehicle often, it may be wise for you to think about leasing, so you can avoid the possibility of losing money on your investment. If this seems like a fitting option for you, again, you can come visit us and we'll help you get started!

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No Matter Your Credit, We've Got You Covered!

No Matter Your Credit, We've Got You Covered!

Want a new car, but bills from the past getting in your way? Don’t fret, you still have options! Larry H. Miller Toyota Murray has professionals that help our customers find a lender. Stop coming up with reasons why you can’t get into a car that not only will handle your needs, but something you’ll love!

What you need to know!

Research:

It is critical that you spend time doing research before visiting the dealership. Although there are a variety of ways a car dealership can help you get behind the wheel of a vehicle you desire, some of these methods will hurt you in the long run. The more prepared you are, the more confidence you’ll have and the less likely you are to fall into a trap. This blog post is meant to serve as a basic guide to buying a car with damaged credit, but your research shouldn’t necessarily stop here.

Your Credit History:

You should have an idea of your credit situation before going into any dealership, so that you’re not surprised by anything and you can also have the opportunity to dispute or fix any credit issues possible. There are websites that offer free credit checks, like Credit Karma. Once you have your credit score, you can take a look at your credit history, as well as know where you sit with your credit score. This information will be useful for your research, so you have an idea of what your capable of receiving, in terms of financing.

What You Need:

Too often, car shoppers fall in love with something they want, rather than something they need. And sometimes, this is the exact decision that results in damage to their credit. Before you go car shopping, take some time to decide what kind of vehicle you need. Do you just need the car to get from Point A to Point B for work? If this is the case, you probably don’t need to get a big SUV. Do you have a large family that requires a lot of room? Then maybe you should look at that big SUV or a minivan. Leather, sunroofs, big rims, upgraded stereo systems, you know, all the bells and whistles? How important is all of this for you? It might be wisest to pass on these luxuries, and exchange it for a smaller monthly payment.

Things You Need to Bring!

Down Payment: While many people would like to buy a car without having to lay out any money up front, this isn’t always the best way to go about purchasing a car. Furthermore, for those buyers with damaged credit, there is more of a need for a down payment. When you provide a down payment, you are showing the lenders commitment, which will go a long way in helping you get a reasonable financing rate. A good rule of thumb for how much you should put toward your down payment is to put down the total cost of all your taxes and fees for the vehicle.

Proof of Employment:

In order to get financed for a vehicle, you will be required to provide proof of employment. This can come in the form of your most recent pay stub. The financial lender will want to see that you are employed and have a source of income. If you do not have a pay stub, you can reach out to your employer and they will be able to provide this documentation.

Proof of Residence:

Be sure to bring along proof of residence. This can come in the form of utility bills, bank statements or even a pay stub with your home address. Proof of residence is also something that is required to be provided by the lender.

In a Nutshell:

We understand that your past is exactly that, the past. While you may have damaged credit, there are options out there for you. The best thing you can do is prepare yourself with research. Larry H. Miller Toyota Murray has professionals that specialize in finding car loans for buyers with circumstances like yours. Don’t be discouraged. Come in to see us, and you’ll be glad you did.

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