Buying or Leasing – Which Suits You Best? The Experts at South Bay Lincoln Are Here To Help
It’s inevitable. When shopping for a new Lincoln the
question comes up – should I buy or should I lease? Both options have their similarities
and differences and their advantages and disadvantages, but either way, you'll
get a Lincoln no matter which one you choose. It's important to have decided on
your ultimate goal.
Leasing a Lincoln
Leasing a Lincoln is somewhat but not exactly like renting
it. You sign a lease for a fixed term, usually two to years, and make a monthly
payment with a fixed interest rate until your lease is up. At the end of your
lease, you can lease or buy another Lincoln.
If you are only driving a limited distance each month, you
might want to consider leasing a Lincoln. Be aware that after signing the lease
and making payments for the term of the contract that you'll return the car and
walk away with no equity.
On the other hand, if you have plans on keeping the car for
more than two or three years, or you drive a great deal each month, you might
want to finance or even pay cash instead so at the end of the term you own the
Lincoln.
Buying a Lincoln
Most people who purchase a Lincoln do so with a combination
of their own cash payment with the remainder covered by financing. You are
offered an interest rate based on your credit and a term in which you must pay
back the loan. Once the loan has been paid off, the Lincoln is yours to
continue driving, or trade-in on a new Lincoln, perhaps using the value of your
car as the down payment. There is also the opportunity to refinance the loan should
interest rates drop.
Benefits of Leasing a
Lincoln
When leasing a car, the payments can be lower than if you
were to finance a car. This can allow you to purchase the exact Lincoln model
and options you desire at a lower monthly payment than it you purchased the
same Lincoln.
Most leased cars are covered under the manufacturer’s
warranty for most repairs, however, you should keep a record of routine
maintenance performed, which is your responsibility to maintain per the owner’s
manual.
Benefits of Buying a
Lincoln
Many people are under the mistaken impression that if they
finance a car that the credit provider “owns” the car until it’s paid off.
That’s not true. Much as when you purchase a home, you own the home but the
bank holds the deed in collateral.
One advantage to financing a Lincoln is that, if this is
your goal, with each payment you are closer to owning the vehicle outright. And
of course you can sell the vehicle at any time. You’ll have to pay off the
balance left on the vehicle, if there is one, and the remainder goes straight
to your pocket.
Drawbacks of Leasing
For those individuals who have leased a vehicle and were
displeased with the outcome are almost always those who underestimated the
miles they drove each year. It’s important to be honest with yourself about
your driving habits, as well as understate the penalty for incremental miles.
The mileage limitation is not been instituted simply to
charge customers more – in fact, it’s very much the opposite. The dealership
wants you to end your lease on a positive note so that you lease or purchase
another vehicle from them. And the reason for the mileage limitations is to
lower the customer’s cost. A low-mileage two-year-old Lincoln is worth more, so
the value at the end of the lease is higher, which means a lower payment for
you.
If you are someone who plans of driving a great deal over
the term of the lease, it’s better to discuss that with the dealer right up
front. There may be an option for a higher mileage lease or it may be
financially advantageous to purchase the vehicle.
It's important to note that if you wish to terminate your
lease early, you could face a fee to do so. It’s best to discuss first with
your dealer who might be able to offer alternatives.
Drawbacks of
Financing a Car
According to Bloomberg, the average term for a new car loan
is 70 months (almost six years). If you opt to finance over a longer period of
time make certain you have a competitive interest rate.
The value of cars depreciates over time but unlike a home
loan, they’re not front-loaded. That means at any point when the balance of your
loan is lower than the value of the car you can trade it in or sell it
outright.
Another difference between leasing and buying is that with a
lease if once you’ve been approved you can often just sign on the line and
drive away. If you purchase a vehicle the company providing the financing will
typically request a down payment be made.
For expert
advice on leasing and buying, and which suits your own personal situation
best, come see the professionals at South
Bay Lincoln 5100 W Rosecrans Ave, Hawthorne, CA.