auto

How do I: Decide to buy or lease a car?

By Rose Raymond • Bankrate.com

Topic: Auto

Who is affected: CONSUMERS AT EVERY STAGE OF LIFE

DEGREE OF DIFFICULTY: Easy

What you'll need: Thinking cap

What you need to know

If you've got new-car fever, you may be torn between buying and leasing that next ride. It's a tough call. Buying offers the obvious advantage of ownership. However, benefits of leasing include a lower monthly payment with a minimal down payment.

If driving a new, flashy car appeals to you, leasing might be the right choice. However, buying a car is typically the better financial move, especially if you don't mind buying a car that's a couple years old.

Both buying and leasing bring pros and cons to the table. It comes down to your personal preference on a number of factors, from payments to mileage.

Size them up side-by-side:

Buying vs. Leasing

	Buying	Leasing
Down payment	Usually around 20 percent	Minimal to zilch
Monthly payment	Higher than leasing -- but eventually you'll own the car	Lower than buying -- but you'll never own the car
Mileage	Unlimited	Usually capped at 12,000 to 15,000 miles, with penalty charges if you exceed the limit
Upkeep and modifications	It's your car -- do what you want!	You should return the car in as close to its original condition as possible, so treat it with kid gloves -- and don't switch out the stereo system

Still undecided?

If you decide to buy a car, enter the months left on your loan, original loan term and loan amount to see how much you will save with an early payoff.

No. of months remaining:

Loan term (months):

Original loan amount:

Before deciding on a new car or a lease, consider the following:

Credit rating. Due to the smaller down payment, lenders are apt to demand a higher credit rating from leasing customers than from buyers

Lifestyle changes. It's easier to trade in a vehicle than to get out of a lease. Be sure to factor in family additions, commute changes and other potential future lifestyle alterations before committing.

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Posted: Jan. 23, 2009

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Product	Rate	+/-	Last week
48 month used car loan	2.92%		2.93%
48 month new car loan	2.45%		2.45%
36 month used car loan	2.88%		2.88%
36 month new car loan	2.29%		2.30%

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