Lease Or Buy A Car, What Is The Best Financial Choice For The Year 2016?
Two short decades ago, if you asked someone if they leased or bought their car, their answer would most likely be “lease, of course.” When the market fell out, the car market fell out, too. The crash of 2009 changed how people bought, sold, and leased cars.
It is still a popular option for those with a car allowance; not everyone is lease-crazy. Not many individuals are opting to lease their cars these days. The reason? With low-interest rates, purchasing a car makes more sense than renting one.
A lease is a great idea in theory. Like borrowing a car, you can drive in the vehicle of your dreams and still afford it. Leasing a car can cost about a third of what a car payment to buy costs per month, which makes it a viable option for those who want a higher-end vehicle that is within their monthly budget.
The problem? Many people have gotten burned on their leases. When the interest rates fell and money became cheaper to borrow, it didn’t make sense to lease. Having no equity in the car at the end of the lease didn’t seem like a smart money choice for many.
Over the past two decades, with less disposable income, people are not only opting to buy cars but have also increased their purchase of used vehicles. Many realize that buying a car just two years old and in great condition is better than paying full price for a new one. Disheartened in knowing that just driving a new car off the lot is a loss, they see the potential of a used car with few miles as a much better buy.
What will 2016 bring for car sales?
There is talk that the Fed will increase interest rates this year. Due to the market’s stability, many see the historic stagnation of interest rates and speculate that an interest rate hike is on the horizon. It’s just speculation; no one knows if it will happen. Why is that important? If interest rates hike, that may mean that it will not only be more difficult to get a loan, but the rates for a new car loan may increase substantially.
If the interest rates to buy a new car go up, then it is more likely that people will back away from purchasing not only a new car but a used one as well. If a buyer can’t get the car they want without paying a lot in finance charges, leasing may again look like a good option for Web Posting Pro.
For many, the decision will come down to how much they have to spend, how much it will cost to finance, and which one is a better buy for their financial situation. In general, however, if interest rates increase, there is good reason to believe that leasing may become a more popular option again.
Which is better for you as a car buyer?
Technology is growing so fast that you can barely get a car home before it has been upgraded and has more of the bells and whistles you would have liked. Leasing allows you to buy a car and use it for a short time without the hassle of having to buy or sell it again in a couple of years when you want a newer car.
If you want to purchase a new car in 2016 and don’t want to pay for extra auto body repairs, you may want to lease and wait for technological advances. In a healthier market, innovation will soar, and you don’t want to be left with an expensive car that is outdated quickly.
You may want to consider purchasing if you are okay without the bells and whistles and want a reliable car to get you from point A to point B. If money stays cheap, buying a new car may make sense. It will save you from more costly repairs and normally comes with a warranty that will get you through the next few years.
If you don’t want a huge car payment every month, consider trading in what you have and buying an older, used model. Cars run well past the 100 thousand mark due to better automotive design and engineering.
Likely, you can find a car that will get you to the next decade and not create hardship in your monthly budget. You don’t have to sacrifice either; many used cars are an incredible deal and don’t have a huge price tag.
So what is the future, car buying or leasing? It depends on what the interest rates do, how stable the economy is, and your overall goals. If your car is working and you can wait, you may want to wait until the new year, or potentially the election, to see what happens to economic conditions.
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