This week we do our best to answer the lightning rod question of buying or leasing a car. While the answer lies in a slightly grey area, we will walk you through characteristics that make each decision correct for you.
According to CNW Market research new car buyers have the following characteristics:
- 70% finance their car
- 18% lease
- 12% pay cash up front
Which option is best for me?
If you are a person who must have a new car every 3-4 years and will continue to trade your car in, no matter the situation, leasing is probably best for you. For everyone else, owning a car for an extended period of time, either through cash purchase or financing options, is probably best.
What is the most economical way to own a car?
Depreciation is our main foe in owning a car. According to the Edmonds auto site, it takes one second off the dealer’s lot to lose the first 10% of value of your car. It takes another 364 days to lose the remaining 9% for a total of 19% first year loss in value on the average new car. After year two, most of us have lost 31% of the value, and by the end of year 3, our vehicles have gone down by almost 50% in total value.
If at all possible, the most economical (strictly by the numbers, no style points here) way to own a car is to own it for as long of a period of time as possible. By doing this, you will make much of your money back during the later, low depreciation years. The old saying “The cheapest car you can own, is a car you own!” is mostly true.
Have a Super Friday and a Great Super Bowl Weekend!
Best Wishes, and Zigg Says “Hi”