Lease or Finance or Cash?

Have you ever wondered if you should get your next car by paying for it outright? Or maybe you considered a lease? Or is it a finance monthly payment that you are after? Today we are going to discuss the advantages of all three.

First let’s get the cash out of the way. If there is no cash incentive in the picture, what’s the point? So don’t pay cash unless the manufacturer is giving you an incentive to pay cash. The other reason to pay cash would be if the car you want doesn’t have an interest rate that makes it worth your while. But these days, interest rates are typically below 5%, so financing makes a lot of sense. Unless you have a way of making your money earn more than 5% of interest, or again the manufacturer is giving you discount for paying cash, don’t bother.

That being said, financing is the most common form of new vehicle purchase those days because the interest rates are typically so low. And no one has $30,000 just lying around. If you are planning on keeping the car, financing will give you up to 7 or sometimes even 8 years to pay it off. And at the interest rates that dealers are selling cars at these days sure makes it easy. Where else can you get a 0.9% loan? Just remember, the real price of the car is the cash price, so work that into the amount and you will notice that it’s not actually 0.9% after all. It just looks that way. But if cash was never an option for you, you can still feel like you got a great rate.

So now let’s talk about leasing. Leasing is by far the cheapest way of driving away in a new car, and if you don’t mind having a car payment for the rest of you life, this is the way to go. You will never own the car, think of it as a X year rental. And sure you have the option to buy it at the end of the lease, and it’s a car that was only driven by you, so there is no way you can buy a better used car. You also get the peace of mind that you will always have a warranty and never have to worry about any serious repairs. There used to be insurance benefits by leasing, but those are now gone. And with some leases, like Honda, you can typically sell your lease at the end and profit $1000. If you are thinking about leasing, check out Lease Busters first. You might get the same car, with a lower payment and less commitment. Sometimes there is even an incentive to take over a lease on Lease Busters.

Hopefully that answers some questions about how to pay for your next car. As mechanics we wouldn’t choose any of these options and we will explain why in our next segment. But you aren’t us, and we aren’t you, we are all different with different needs. And that is why a new car might be right for you. In either case, we hope that you come see us for your oil changes, brake service or fluid checks in your brand new shiny car. We will give you the best service, at the best price and you’ve already got the best car, so what more do you need? Think of Top Gear as London’s number one alternative to the dealer. We will look after you here!