When you go to purchase your new vehicle, there are a lot of decisions to make. Once you figure out what kind of car you want, then you need to decide how to pay for it,
The difference can mean more money in your pocket depending on how you look at it. Here is an example for a 2020 Kia Forte.
Example #1 You purchase the car for $ 18,000 for the car, including tax and other fees
You have $2,000 to pay the dealership and will have to finance $16,000
Purchase Price $18,000
Cash Paid (2,000)
Amount Financed $16,000
Divide by 48 months $333.33 / month base payment
Interest @ 3.25% 42.73
Total Monthly Payment $376.06
When you make all the payments, the car is yours to do what you want
You have $2,000 to pay the dealership, and the residual is $9,000. You only have to finance $7,000.
Purchase Price $18,000
Cash Paid (2,000)
Residual (9,000)
Amount Financed $7,000
Divide by 48 months $145.83 / month base payment
Interest @ 3.25% $18.96
Total Monthly Payment $164.79
When you make all of your payments, the balance due is $9,000. At this point, you can pay the $9,000. You can trade the car in for another car, or you can walk away.
Leasing is good for people that want a new car all the time because you only pay for how much you use it. If you keep cars until they die, then financing is a better plan.
Works Cited
Consumer Reports. “Leasing vs. Buying a New Car.” Consumer Reports, www.consumerreports.org/buying-a-car/leasing-vs-buying-a-new-car/.
“Leasing vs. Buying A Car - Breaking Down The Numbers.” Your Easiest Way to Lease, www.carlease.com/posts/2017/leasing-vs-buying-a-car-breaking-down-the-numbers.
Watson, Charlie. “Is Leasing A Car A Glorified Rental?” Cinci Auto News, 13 Dec. 2017, cinci-auto-news.com/2017/12/12/is-leasing-a-car-a-glorified-rental/.
This was actually a good thing to know because my dad has bought cars and things but he has also leased cars but I've never really know the difference. The data that you used of the difference of the month to month pay is good to know because this might be something I want to do in the furture.
ReplyDeleteI've heard about the difference between buying and leasing a car but I never put a lot of thought into it because I didn't think it would affect me until now. I never knew about the type of math that is included with all of this and it will be nice to know for the future.
ReplyDeleteI have heard about leasing and renting, but honestly when people start talking about cars I kind of zone out. I had no idea how drastically different leasing and renting could be! The difference in the total monthly payment is kind of insaaane!!! I wonder how this impacts our economy as a whole and how either high or low interest rates are incentives for either renting or leasing. Great post, I really appreciate how you broke down each monetary value.
ReplyDeleteTo be honest, I have always thought that leasing a car would never come into my life. On the other hand, many of my older family members have leased some nice cars and have ended up saving them a lot of money. I have always wanted to get my first car as a legit purchase to own it right away, but leasing a car later in my college career might be the best option.
ReplyDeleteI always assumed that leasing a car would end up costing a lot more money. It is interesting to see that that is not necessarily the case. I'm still curious if there are any cons to leasing such as fewer freedoms.
ReplyDeleteThis blog post was very informational and very useful for us to take a look at. I have never really thought about the differences between buying and leasing a vehicle, so for you to outline the differing costs and payments was really effective. I didn't think I would ever lease a car, but after you compared these points, leasing does not sound like a bad option at all. I would be sure to keep these in mind for the future.
ReplyDeleteI have never really fully understood what it means to lease a car, and this post really laid it out for me in a way that was clear and easy to understand. I definitely feel more educated on this topic and when I am older I will feel more prepared to make this decision myself. You outlined the differences between buying and leasing in a really nice manner, which helped show the true pros and cons for each method.
ReplyDeleteNever in my life has this been explained so clear, I really like how you would explain it and then break it down with the numbers. I had a general understanding of what leasing was but not completely. I also appreciate how it was short and sweet, quick to the point and finished quick.
ReplyDeleteGoing into this article, I already knew the basics of what leasing was and how to do it. However, this simplified things further for me. I also like how, despite the current market conditions allowing for lower prices, you used the common interest rate for leasing a car. This is useful information for anyone, considering it's the usual way of buying a car.
ReplyDeleteBefore this I never really knew what leasing a car meant, so this was very beneficial for me to read. At some point either in college or after graduation I will have to get my own car and that is when I will need to decide if I want to lease or buy the car. Before this, I never really considered leasing a vehicle but many people do it and it is a chance to only pay for how much I am using the car. At the time, my decision would probably come down to where I am financially and how long I plan to have that specific car.
ReplyDeleteI personally think both options are subjective towards what you are looking for in your car. Some people have to commute 40+ mins a day which racks up high mileage on a leased car which can cause going over on your miles. But if you are only going a few miles a day or rarely travel a lease can be great to cut cost on your car as long as your responsible and take proper care of your lease
ReplyDeleteI like how you included the personal factor of whether you like to switch cars out sooner or later. This includes an important part of the population that likes riding new cars because of the different steering feels and characteristics. On the other hand you have the people who just want to get from point A to point B.
ReplyDelete