Buying a new car and taking on a new car payment can be a substantial financial responsibility. Instead of buying a car outright, there are alternative ways to pay for one.

Instead of taking out a loan, you may be able to lease a car for less. Each of these options comes with its separate benefits, which make them appealing choices for people looking to obtain a new SUV, car or truck.

What Is a Lease?

A lease is similar to renting a car, just for lengthier periods. A lease is paid for through a fixed monthly fee that is usually lower in cost than the monthly payments from buying a car. It is an agreement between the customer and the vehicle company to use a car for a certain number of years.

Leasing is a common choice for budget drivers who are looking for a deal. This may help reduce the upfront costs and allow certain drivers to enjoy new car driving at a lower cost.

On the other hand, a luxury car may be leased because the new owner loves the flexibility they get with leasing. Leasing deals are common with tech geeks, driving enthusiasts, and others who update their ride as style, amenities, and technologies change. Phoenix AZ Cadillac dealers frequently handle leases for luxury car customers.

If you choose to lease, when the contract is finished you return the car to the dealer or exercise a lease buyout option. A lease buyout allows you to purchase the leased car instead of returning it. This option may allow you to drive a car for a lower price than if you got a loan.

What Is a Loan?

A loan is when the customer borrows money from a bank to pay for their vehicle. When receiving a loan, there is more of an upfront cost since interest will amortize. More interest is due at the beginning of the loan than at the end, as you pay off the initial loan. Once the loan has been paid, the customer will own the car. A payment calculator helps shoppers estimate their costs.

Since the bank provides the loan, they may also limit your ability to borrow money for other investments while you continue paying off your car loan. If you have pre-existing loans that have yet to be paid, the bank may decline your request for an auto loan.

Of course, owning a car has many benefits. Once you own the car, when the loan has been completed, you have the option to re-sell the vehicle. You also will not have any penalties for going over the given mileage limit. You can check here to understand more about auto loans and how you’ll qualify.

What About Warranties and Down Payments?

Warranties will apply to both loans and leases. However, it may make a difference if you are planning to get a loan to keep your car as a long-term investment. At a Hyundai dealer, you automatically get powertrain warranty coverage that lasts up to five years longer than most rival brands. This is also true of a Genesis dealer. Although these are luxury vehicles, they also have the rare 10-year powertrain warranty and 5-year limited warranty.

If you are getting a lease that is longer than the standard warranty, which is a common occurrence with most brands, you can get extended warranty coverage to last for the term of your lease.

Whether getting a lease or taking out a loan, there is always the matter of a down payment. A good trade-in often helps with this. You can get a competitive trade-in evaluation from a reputable local dealer and get your resale value locked in.

How To Choose Between a Lease or Loan

There are pros and cons to both leasing and loaning a car. These depend on what it is you are looking for as the customer. To determine which option is best for you, consider these factors:

• Are you looking to one day own the vehicle?

• Are you financially able to provide a down payment for the loan?

• Do you have any past or current loans that may cause the bank to deny your request?

• Will you need to take out a separate loan, such as a home loan, while you will be paying this auto loan?

Getting a loan is a good option if you are in good standing with the credit bureau, have no need for another loan within a short time span, and truly wish to own the car.

Leasing a car may be a better option if you can start monthly payments without assistance from the bank, do not want the car for more than a few years, or would like a low fixed-rate monthly payment.

Whether buying or leasing, you should use an online application from a local, reputable dealer to find out how much you can borrow. You should use caution when dealing with an online loan agency that doesn’t have a physical store in your location.

Final Statement: The Choice Is Yours

Leases and car loans each come with their own perks and are successful alternatives to buying a new car. Depending on your current goals (whether you want to own the car at the end of the lease/loan, if you like the idea of a new car every three years, etc.) the better choice is up to you.

Besides buying a house, buying a new car is the biggest purchase you are likely to make. With the cost and extensive list of options, this process can be understandably stressful. To help alleviate that stress, you should be as prepared as possible before making a final decision. This checklist will serve as a template to help you make the right choice.

Research Brands

Your decision-making process should begin before you even set foot on a lot. Doing your research beforehand can eliminate most of the stress of buying a new car.

If you are buying a luxury car, you will want to see how brands are ranked these days. You don’t want to waste money on a Mercedes-Benz if you can get more just by visiting a new Cadillac dealer.

Likewise, if you are focused on your budget, you should get the maximum warranty without having to pay an extra. Only a few brands offer long warranties. At a new Hyundai dealer, your purchase will come with two extra years of the limited warranty and five extra years of powertrain warranty.

New luxury sedans and SUVs at a Scottsdale AZ Genesis dealer also come with this really long coverage . Of course, you need to check the fine print, but that’s some incredible peace of mind.

What Type of Car Do You Want

There are a lot of choices out there, so narrowing down your search to a general size and type as well as specific features is an essential step. You can do this as you research brands.

Car Price Considerations

Before you get to the lot, research online sites to determine fair market prices for the vehicle you are interested in buying. Know your budget and stick to it. A free payment calculator can help you decide what monthly payment you can expect.

Automotive Financing Options

You may have a specific financial institution you are comfortable using to make big purchases, such as your credit union. Car dealerships often offer in-house financing and may have special interest rates and promotions. This is often the easiest and most cost-effective approach to new car financing.

Cost of Operating Your Vehicle

While your monthly note is important to your budget, don’t forget to factor in other operating costs. Remember that gas mileage, maintenance costs, and insurance can also vary depending on the model.

Check Your Credit

Your credit score can go a long way in determining your financing options. Check your credit before heading to the dealership to know where you stand.

Come Prepared

You will need to bring several items with you to complete your purchase. Be prepared to show documents such as your driver’s license, proof of insurance, and proof of income.

Investigating the Car on the Lot

Now that you are ready, it’s time to head to the dealership. Doing your research beforehand is essential, but checking out the car in person will give you a better idea if this is the right choice for you.

Check Out the Details

Hopefully, this car will last you for years. So make sure it’s a good fit for you. Are the seats comfortable? Does it have all of the features you expected? Does it have the storage capacity you require?

Test Drive

Map out an area around the dealership that will test the car’s abilities. If possible, choose a route similar to the one you will be driving daily. Be sure to check out how responsive the brakes are. How does the car handle? Are you able to comfortably and safely park and back up as needed?

Negotiating the Deal

You’ve found the car of your dreams, now it’s time to get the deal of your dreams too. Now you have completed research and know the price you are comfortable paying.

Be Confident

You’ve done your research. You know what you’re willing to pay. But car dealerships are businesses looking to make a profit. While they would love to sell you a car, there is a price they want to sell for and a price they are willing to sell for. Don’t be afraid to walk away.

Check for Deals

During certain times of the year, dealerships may be running promotions with special discounts or financing options. Do not hesitate to take advantage of these deals as they may save you thousands.

Trade-in

The salesman will ask if you have a trade-in vehicle. You should get information on how much your car is worth before you go to the dealer. It’s an easy process with this online trade-in evaluation tool.

Fine Print

After you have negotiated the purchase price, you still have work to do. The details included in your contract are paramount as well. The down payment and added fees information can quickly add up.

Counteroffer

If your salesman’s price isn’t what you expected, don’t be afraid to make a counteroffer. Even if the price is what you were willing to pay you should counter. You may get an even better deal than you were expecting. There are often more luxury car deals than there are for regular brands.

Conclusion

This checklist is guaranteed to prepare you for buying a new car. We understand the importance of getting the most for your money. Find a local car dealer and start your search today!