What’s the biggest decision when you buy your first car? No, it’s not which color to choose—though that may seem like one of the most important ones. There are actually several things to consider once you’re ready to make the big purchase or lease a car for a few years—and you know what budget you’re working with.
I found these 7 steps to follow at investorguide.com, and I thought they created a perfect checklist:
- Decide whether to get a new or used car.
- Decide whether to buy or lease.
- Arrange for financing, if necessary.
- Research your options.
- Conduct test drives.
- Decide where you'll buy the car.
- Buy the car.
One of the things I really wondered about when I was looking for my first car was what it means to lease a car, rather than buy it. Here are some fun facts about leasing:
- It costs less monthly because you’re paying on the estimated depreciation of the car over the lease period, rather than paying for the whole value of the car.
- When the lease begins, you’ll pay the first month’s payment, title taxes, registration, banking fees a security deposit.
- When you don’t want the car anymore, you don’t have to worry about selling it, you just return it to the dealer.
- You will pay monthly tax with each payment.
- You don’t actually own the car.
- You aren’t able to make modifications to the car like you could if you owned it.
- You have to keep the car in really good condition, you may be charged additional fees at the end of the lease for minor repairs for scratches or door dings.
- There are additional charges for mileage over in excess of what’s allowed in the lease agreement (i.e. usually only 10,000 – 12,000 miles per year) that could be super expensive.
- Many leases require that you have the highest insurance coverage available.
- Most require a strong credit history.
Another great place for information is Edmunds.com, where they list the advantages and the benefits of both leasing and buying a car. In the end, the choice really is up to you and what’s best for your unique situation. I purchased both my first and second car because I liked knowing that I owned them—and I drive a lot, so there was no way that a mileage restriction would work for me. Plus, when you own a car, you get to decide when you want to sell it—with a lease, you have to decide if you want to buy out your lease when it expires.
It’s good to know and think about some of these things beforehand. Any car, bought or leased, new or used, is a major purchase. And always remember that whether you’re buying a car with your parents, or you’re old enough to do it on your own, Mission Fed offers Auto Loans with great rates and we’re happy to answer any questions you may have when making this big decision.
The more you figure out prior to walking onto the sales lot, the easier it will be to focus on the other important decisions about your car—like gas mileage, a leather interior, a sunroof or finding just the right color.
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