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Auto PaymentsMaking that choice that’s best for your money, ... and blows your hair back, too!! The joys – and responsibilities – of car ownership“When I grow up, I’m not going to have a car,” my seven-year old cousin announced one day, “I’m going to have a horse.” Her rationale was that horses – unlike cars – can’t break down or get in wrecks. Alas, most of us adults cannot afford such simple thinking. In most cities today, a car is a necessity (besides the fact that horses can break down, do get in wrecks, and have a myriad of other issues that cars don’t). Most often, with a car – or a horse – comes a car payment. Whether you’re leasing a car or making payments on a loan, your car probably takes a good chunk of your monthly budget. Add auto insurance , gas, and maintenance, and you’re chewing up an even bigger percentage of your budget. But owning a car can be fun, too. Whether you prefer a fire-engine red '59 Coupe de Ville, a sleek black BMW Roadster, or a 1986 beige Ford Bronco, your car can be an expression of your identity. And while it may seem that you can only have fun with your car if you have at least $50,000 to plunk down at the dealership, it doesn’t have to be that way. You can own a reliable, economical car that’s fun, too, no matter what your budget. Read on to see how. . . Or click here to see cars on the market today. Used versus newIn the used versus new debate there’s no clear winner: there are distinct advantages on both sides. One of the biggest advantages of buying a used car is that it’s cheaper than a comparable new car. That’s partly because the used car is older, but it’s also because a car depreciates significantly – sometimes as much as 20 percent – the moment it’s driven off the lot. Buy a car that’s one year old, and the previous owner absorbed those depreciation costs for you. But there are advantages of buying new, too. One is that your car will be completely under warranty. Usually, for at least 3 years or 30,000 miles the dealer will cover anything that goes wrong with your car (except for problems you cause, of course). Along with that advantage, you’ll pay less to maintain a new car than an older one. Again, that’s partly because any major repairs with a new car will be covered by the warranty, but it’s also because new cars tend to need fewer repairs than older cars (like people, cars deteriorate with age). The concept of “certified pre-owned” is a fairly new idea that has made the case for buying a used car a lot stronger. With a certified pre-owned car, you don’t have to worry about getting a clunker that’s just about to fall apart, and – in some cases – you’ll still be covered under the car’s original (or extended) warranty. Whether you decide to buy a new car, a used car, or a certified pre-owned – and whether you’re buying from the dealership or the guy next door, there are several things you can do to maximize the chances that the car you buy will be a great one: 1. If you’re buying a used car, take it to an independent mechanic to have it checked out before you buy. This might cost you $100 but could save you many headaches, heartaches, and $1000’s in the long run. 2. If you’re buying a used car, get a vehicle history report from CarFax or AutoCheck to see what major work has been done to the car (including major accident repair) – which certified repair shops are required to log with the vehicles ID. 3. Whether you’re buying a new or used car, check out the vehicle’s ratings – on everything from fuel economy to safety to road handling – with an independent rating organization like Consumer Reports. To check out used and new cars for sale, click here. Lease versus buyWhether you have a college degree in finance or flunked eighth-grade math, the intricate details of car leasing are complicated. The Federal Trade Commission has issued regulations to make leasing more transparent and to reduce the number of people taken advantage of in auto leases. To educate yourself on the ins and outs of auto leasing, a good first stop is the FTC’s website. Basically a lease works like this: instead of paying in installments to purchase the car, you pay over a set period of time the depreciation of the car. To calculate the depreciation, the lender takes the purchase price of the car (called the capitalized cost) and subtracts from that the amount he thinks the car will be worth when your lease is up (called the residual value). That amount, plus taxes, fees, and finance charges divided by the lease term is the amount you’ll pay each month. One obvious downside to leasing is that it’s more complicated than taking out a loan to buy a car. But, leasing has its advantages too, such as lower monthly payments that could help you afford a car you could not afford to buy. If you don’t like to own a car for more than 3 years anyway, or you shudder at the thought of driving around in a car that’s no longer under warranty, a lease agreement that has you returning the car at the end of 36 months may be a wise idea. If, on the other hand, you become emotionally attached to your vehicle (yes, I admit, I am one of those kind, remiss to say goodbye to my 1996 GMC Yukon that has become, in her older age, somewhat of a money pit) then buying may be the better option. Here are some other factors to consider:
To get more information about leasing or buying a car, click here. Whether you choose old or new, leased or bought, getting a new (to you) car can be a lot of fun. Remember your due diligence, read the fine print, shop around, buckle up, and hit the open road!
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