Leasing vs. Buying Do you want to own the vehicle, or rent it? Do you want to upgrade your vehicle every few years?
Leasing Benefits: Down Payment and Monthly Payments Upgrading your car Bank Loans Drawbacks: Car Rental Mileage and other restrictions Higher insurance costs Closed-end vs. Open-end
Buying Benefits: Owning the vehicle Free of restrictions and penalties Insurance rates Drawbacks: Down-payment and monthly payments Risk of an upside-down loan
Dealership vs. Institution Financing Where can one find the best loan rates? Which method requires less hassle?
Dealership Financing Most simplistic approach Most expensive approach Back-End Business Scheme Dealerships receive big bonuses for signing buyers to higher interest rates The dealership may not have your best interest in mind
Institution Financing Shop around Start with one’s personal bank Other banks Other lenders Negotiate all the details, but do not sign Go to the dealership with this knowledge
Paying Cash Eliminate monthly payments Interest and finance fees Easier to sell the car later on Do not empty your savings Leave yourself a rainy day fund
Down-Payment and Loan Terms At least a 10% down-payment on an old car At least a 20% down-payment on newer cars Increasing your down-payment can significantly reduce the overall cost of the car
Rebate or Dealer Financing Dealers make you pick one of the two The low interest rates typically only apply to older, slower-moving models Generally, dealer rebates pay off more