Car buying is an art. Become a savvy shopper, and make wise decisions on your next trip to the dealership. Learn about buying versus leasing.
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Puzzle Of The Week:
- [2:30] – Unpack the decisions you’re making when buying a car.
[2:48] – Should I Buy New Or Used.
- This depends on how you view car buying. If it’s a dollars and cents issue, clearly, buying a used car is the way to go. If you buy used, you’re not having to pay for the depreciation that comes along with a new car. A new car starts to depreciate drastically in value as soon as it comes off the lot. Having said that, new cars are nice, and they’ll probably last a little longer than a used car. If you’re planning to drive your car into the ground, you probably won’t lose by buying a new one.
[3:47] – Turnover Causes Problems.
- You get into trouble when you buy a new car every time you finish paying off your old car. You can argue, “But Dan, my car payment is staying the same.” It is, but you’re not getting all of the benefits of owning the car. The point is to own the car for a long, long time and not have any payments on it. Your car ownership is never going to make you rich, but if you can pay it off quickly and put that payment somewhere else (IRA, 401k, etc…), you’re going to begin to build wealth.
[4:40] – Leasing Versus Buying Your Car.
- This has to be one of the biggest debates surrounding car-buying. (Disclaimer: Dan has done both). If you buy your car outright, you’re in control. As long as you lease your car, you’re going to have a payment. Remember, leasing can get expensive. The math can get a little confusing, but basically, when you buy a car, it immediately begins losing value. The dealer wants to make sure to get their cut, so they’re going to charge you whatever the going rate for that car is plus interest. Therefore, if you lease a $25,000 car, you end up paying more than that, and you’re left with a car that’s worth half that in four or five years. Oh, and remember, leasing agreements include mileage restrictions. I.e. You have to trade your car in before it hits “x” mileage or you have to fork up even more cash. Therefore, know your driving habits before leasing. In fact, we’ll go as far as to say you’ll never get ahead financially by leasing. If you’re going to lease, do it simply because you want to drive a new car. Leasing keeps you in a shiny, new car. Just make sure you can afford to do that.
- [7:33] – Dave Ramsey really hates leasing.
- [8:55] – If you’re thinking about leasing, ask yourself “Why?”
Puzzle Solver Assignment:
- [10:21] – If you own a car, find out what it’s worth. After that, find out what you owe on it and what the difference is between that number and your car’s worth. If you owe more than the car is worth, you’re what we call “underwater.” Please, don’t ever sell a car in this position. Pay it off, keep driving it, and then trade it in for whatever residual value you have left. Don’t get into the habit of rolling debt on one car into the next. After you’ve determined the finances, determine how many miles you’re putting on your car each year. Finally, think ahead to your next car purchase. When will that be? Start saving your car payment now, and buy your car outright. That way, you’re not running into money problems going forward.
The Full Picture:
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The host: Dan Cuprill – Schedule A Time To Meet – Or Call: (513) 563 – 7526
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