Examine your needs to decide if you should lease or buy your next vehicle.
- What size of vehicle do you need; is it a possibility you may add to your family in the coming years?
- How many miles do you drive a year?
- Consider a leased vehicle if you drive fewer than 12,000 miles per year.Â
- Purchasing a vehicle is a good idea if you put a lot of miles on your vehicle.
- Do want to own the vehicle at the end of your financing term?
- Examine your budget and decide how much car you can afford and stay within budget
- Check your credit report and take care of any inaccuracies before getting pre-approved to lease or buy a new vehicle.
- Research new vehicles; look at safety ratings and owner satisfaction reviews
- Narrow your choices based upon what you can afford, the optional add-ons, safety features, and reliability of the car, truck, or SUV.
Pros and Cons of Buying a Car:
PROs
- Purchase a car, it's yours to keep.
- You won't be penalized for driving excessively or damaging the vehicle.Â
- NO monthly payments after the car is paid off. If you are the type of driver that keeps their car long term it is better to purchase.
- Buying a car is a good idea for people with a long commute, or who are unsure where they might be in the next few years.Â
- Buying also means that when the loan is paid off, the car and it's residual value are yours to keep.Â
- No mileage restrictions.
- Your credit doesn't have to be excellent.
- Customize your ride how you see fit for your lifestyle and personality.
CONs
- Having a car that's yours to keep can be a big commitment.Â
- More expensive: buying a car is more expensive than leasing. With a car loan the interest that you pay is based on the entire balance, ans sales tax that you pay will be higher.
- You will need to arrange to sell or trade-in your car when want something different.Â
- A car loan payment is a bigger monthly financial commitment than a lease payment, as you are paying back the entire value of the car.
- Be aware that long term loans may get your monthly payments down but also come with a higher interest rate.
- You often will be required by lenders to place a 10%-20% down payment.
- You lose out on the latest technology and safety improvements.
Common Lease Definitions
1. Mileage Allowance: The number of miles you can drive during the period you lease the vehicle lease without penalty. It is stated in terms of monthly allowance, or the total cumulative mileage. Typical mileage overage fees if you go over the allowance are 15-25, or .35, if it is a high performance vehicle, cents per mile.
2. Acquisition Fee: The fee charged by leasing companies and banks to cover costs of administering the lease terms. They average about $400 and are rarely negotiable.
3. Adjusted Capitalized Cost: This is the amount you are financing in the lease or also known as the bottom line. The cost of the car you are leasing, including the tax, title, and license, minus any down payment, trade allowance, or rebates.
4. Capitalized Cost Reduction: A down payment or other credit that lowers the capitalized cost of a lease. The down payment may come in the form of cash and/or a rebate, trade-in allowance or other credit.
5. Closed-end lease: A lease that doesn't require the consumer to buy the vehicle at the end of the lease for the predetermined residual value. Closed-end leases, which are by far the most common type, usually allow lessees to buy the car if they want, as opposed to walking away from it, or trading it in.
6. Money factor (or interest rate): A fractional number, such as .0075, used to calculate a lease fee or charge. The money factor is based on a formula that lessors devise to determine their profit. Buyers should look for a lower number. While lessors are not required to disclose the money factor, you can insist on knowing it before entering a lease. You can get a rough equivalent of an annual percentage rate if you multiply the money factor by 2,400 to get really close to the actual APR equivalent. When automakers are running lease specials, the money factor can be as low as .00001.
7. Residual value: The car's wholesale value, at the end of the lease, which is projected at the beginning by the lease company. Higher residual values translate to lower monthly payments but increase the cost to buy the car at the end of the lease. This number is set in stone and you will know how much the residual value is when you enter into the lease.
8. Single-payment lease: A lease in which you can pay all of the lease fees and payments at the beginning. A likely user is a buyer who could pay cash to buy a car but wants to have a new vehicle every three years or so and doesn't want to bother with selling or trading the old one, or with making monthly payments. There is often a lower interest rate on the lease since the lease company gets all its money up front.Â
Ask
our leasing specialists what option is best for you. If you live in
Lakewood or coming from the Denver area including Boulder, Thornton,
Littleton or Parker, CO we offer you competitive lease rates with 24-60
month lease terms on new Ford vehicles.
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