Transcript What’s the difference?  Buying – Ownership of the vehicle, have option to sell later on  Leasing – “Renting” the vehicle, sometimes have option to.

What’s the difference?

Buying – Ownership of the vehicle, have option to
sell later on

Leasing – “Renting” the vehicle, sometimes have
option to buy at end
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Do your research
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Safety
There are two aspects of safety. One is called "passive safety," which concerns itself primarily with protection of the
occupants in the event of a crash. For the most part, passive safety is the job of the car, although the occupants have the
responsibility to use the seat belts. Features associated with passive safety include airbags, energy-absorbing crumple
zones, seat-belt pretensioners, head-protection devices and the like. The other aspect is called "active safety," which
concerns itself primarily with not having the crash in the first place. For the most part, active safety is the job of the driver,
but certain important features on the car can help the driver avoid a crash. These features include such things as antilock
brakes, traction control and stability control. For driving in bad weather or on slippery surfaces, all-wheel drive or fourwheel drive can also be considered as having a positive effect on active safety.
The relative importance of these features may vary based upon your driving style and where you drive. You can also check
the National Highway Traffic Safety Administration's (NHTSA) Government 5-Star Safety ratings. These ratings will give
you an idea of the relative performance levels of various cars and trucks in crashes, and an indication of how your
prospective vehicle's safety features compare to those of others. In 2010, NHTSA will release updated, more rigorous
safety standards and in 2011, NHTSA will begin promoting crash avoidance technologies as standard features as part of
the new Government 5-Star Safety ratings. You can learn more about crash avoidance technologies on NHTSA's website.
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Quality
An online analysis of how your favorite vehicles rate in quality can be a true eye-opener. Years ago, quality referred only to
the absence of defects in a car. Now, research organizations, such as J.D. Power, have expanded their research analysis
to cover positive aspects of new cars.
This valuable information is provided in the form of J.D. Power Circle Ratings. On the absence-of-defects side, sometimes
described as "things gone wrong," you can find out how the car rates in mechanical, feature and accessory quality and the
quality of the body and interior. For positive aspects of quality, known as "things gone right," you'll find ratings for
performance, creature comforts and style. There's also a score for the dealership experience based on the J. D. Power
"Customer Service Index.“
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Expert Opinions
Another way to gain confidence in your purchase is to spend some time reading what the experts have to say about your
new vehicle. Reading the opinion of experts before the test drive serves many purposes: You can discover the strengths of
the car's performance, see how the vehicle compares in its class and learn how the vehicle rides and performs on longer
trips, or what it's like to drive around town.
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Owner Opinions
The opinion of owners is also a valuable resource. With this tool you can discover how owners rate their new cars. A visit
to the consumer review section of each vehicle pricing report on kbb.com will give you access to personal ratings and
comments. After you purchase your car, you can submit a review of your own to help others make informed decisions.
Calculating Affordability
The car buying/leasing process is greatly simplified when you discover the bottom-line vehicle price you can afford
ahead of time.
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"The trade-in value of the vehicle I currently own is $10,400.“
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"I owe $2,200 on it." Meaning, you have about $8,200 equity in the car.
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"I've got $2,000 in savings I want to put down." Meaning, with the trade, you will be able to give the dealer a
total of about $10,200.
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"I want to keep my payments under $400 per month for 60 months." That monthly payment schedule will
finance, roughly, about $20,000, meaning the total price of the whole package can be the $20,000 plus the
$10,200 you have handed the dealer, or $30,200.
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That means a new car in the price range of roughly $27,000, because there will be, generally, about 10
percent added in taxes, license, fees and so forth.
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Furthermore, it means the whole deal, by the time you have paid it off in five years, will have cost you about
$34,200 ($400 times 60 months is $24,000, plus the $10,200 you gave the dealer in the form of your trade and
the $2,000 down.
This means the same as:
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"I can afford to buy a $27,000 vehicle." And it's going to cost you $34,200 and five years to do it.
Loan Amount
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To discover the amount you need to borrow, calculate the
monthly payment you can afford via our payment
calculator. This tool factors the interest rate and the term
of your loan. Now add your available cash with the loan
amount and you'll begin to arrive at a price that works for
you.
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Check for any customer or dealer incentives that may be
available on your new vehicle, adding to your available
cash amount.
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You still need to add state tax, license and fees, which
vary by state and can be obtained through your local
DMV.
The market drives the deal
One thing you can count on is that car prices change as popularity, supply and other factors
change. In other words, if you are buying a popular car in short supply, when it first comes to
market, you can expect to pay more.
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Buy out-of-season vehicles -- like a convertible in cold weather or the winter season
Buy a model late in the year before the body-style change
Buy an overstocked or mass-market vehicle with a customer cash incentive -incentives are typically higher in the summer and winter months
Buy around the last day of the month -- dealers have monthly sales quotas
Buy at the end of the year -- some dealers will clear out inventory for tax reasons
New car pricing
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Invoice Price
The new car pricing report details the invoice price on each trim
level. Dealer Invoice is the dealer's cost for the vehicle only and
doesn't include any of the dealer's costs for advertising, selling,
preparing, displaying or financing the vehicle.
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MSRP Price
The MSRP is the Manufacturer's Suggested Retail Price, also
known as the "sticker price." This price is required by law to be
posted on every new vehicle and is usually -- but not always -the highest market price. The exceptions occur when certain
vehicles are in high demand or have low availability.
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Fair Purchase Price Range
Also, check out an available price called Fair Purchase Price.
Updated weekly, the experts at Kelley Blue Book have
developed the most accurate pricing guidelines for new-car
buyers based on purchase data collected across the country.
Side by side comparison
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Another tool that will help you narrow your search is the SideBy-Side Comparison, which allows you to compare
specifications and see which features are standard or optional
on each new car. This is an especially helpful exercise when
you are down to just a few vehicles and want to compare finer
points or features.
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These easy-to-use internet tools put you in a position to
effortlessly analyze your choices before making your final
decision. Avoid making the common mistake of impulse buying.
A minor delay in automotive gratification is worth the time spent,
especially when receiving that information from a trusted
source. Kelley Blue Book takes pride in serving you with the
information you need, when you need it the most.
Warranties
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Chances are, an extended warranty or service
contract will be offered to you when buying your next
car. An extended service contract backed by an auto
manufacturer is usually your safest bet. These
contracts encompass a wide range of repairs and
services. The repairs can be done at any authorized
dealership and tend to be approved without a hitch.
You won't pay a penny for approved repairs unless
your contract includes a deductible.
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An extended warranty from an independent
company could cost less than an extended service
contract from a manufacturer. But the quality of this
kind of contract varies widely from company to
company. Shop carefully.
Insurance Rates
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The truth is, automobile insurance is a necessity. Several states require
all vehicle owners to have insurance and be able to show proof of it.
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The type of vehicle you choose and the history of your driving record
can have a profound effect on the cost of insurance. Typically, sports
cars, high-performance cars, turbocharged or supercharged vehicles,
those with larger engines and vehicles with four-wheel drive often result
in higher insurance rates. Also, vehicles with histories of being stolen
can demand a premium.
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Since it always pays to shop around, check rates with your insurance
company before you buy your new vehicle, then quote & name your
price with Progressive online to compare.
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These additional expenses may be unavoidable, but they can also be
negotiable and should be reviewed carefully before making your next
purchase. As a result, you could save yourself a lot of money and
aggravation in the years ahead.
Is leasing is a bad idea?
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In general, if you keep a car well past the day the loan is paid off (or if you pay cash to
begin with), you'll save money by buying. But if you trade in your car before the loan is
paid off, the value of the trade-in is unlikely to cover the remaining balance on the loan.
And if you shop -- and negotiate -- as hard for a lease deal as you would for a
purchase, you can come out ahead by leasing.
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Say you negotiate to buy a 2013 Nissan Altima 2.5 S (sticker price: $23,365) for invoice
price -- $21,403 -- with 10% down and a five-year loan at 2.9%. But after three years
you decide you want a new car. If you trade in the Altima, you will likely get about 46%
of the sticker price, or $10,621 (the resale value after three years, according to the
Kelley Blue Book). Then you'll have to pay off the loan. Figure your total out-of-pocket
cost will be $9,525.
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But if you lease that new Altima for three years, your monthly payments will be $179
with a $1,820 down payment (Nissan has been offering subsidized leases on the 2013
Altima). When you turn in the car at the end of the lease, you'll just walk away (unless
you go over your mileage allotment or have unusual wear and tear). Total out-of-pocket
cost: $8,264. In this case, leasing would leave you $1,261 richer.
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In most states, you pay taxes only on the actual lease payments, so leasing can put
you even further ahead , plus you typically don't have to bring cash to the table for a
lease.
Difficult to negotiate a good lease
Almost every facet of a lease is negotiable, but you need to understand the jargon
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Capitalized cost. In the leasing universe, this is the vehicle price. You should haggle over this figure just as hard as
you would haggle over the price if you were buying.
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Money factor. The lower this number, the better (you have to multiply it by 2,400 to get an estimate of the interest
rate. Dealers are sometimes reluctant to reveal the money factor, so be persistent.
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Residual value. This is the value of the car or truck at the end of the lease.
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An inflated residual value lowers your monthly payments, but it can also handcuff you. A more realistic
residual value will make it easier to sell the lease, trade your vehicle in the middle of the lease or buy
the vehicle at the end of the lease.
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Shop for your lease at the dealer, banks and credit unions, focusing on the money factor and the
residual value. (No matter who writes your lease, you’ll have to haggle with the dealer over the
capitalized cost.) You can also go to LeaseCompare.com to comparison shop and apply for a lease.
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Negotiate the final price of the vehicle up from the rock-bottom cost to the dealership. You can find out
what new cars cost a dealer for $14 per vehicle at Consumer Reports. Your monthly payments will be
based on the price you and the salesperson settle on. That price will fall somewhere between the
dealer’s wholesale price and the manufacturer’s suggested retail price.
You could have to pay large fees when
you turn the car in
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The typical annual allotment is 10,000 to 15,000
miles
There is usually a 20- to 25-cents-per-mile penalty
for exceeding the limit
You may be able to negotiate a higher mileage
limit in exchange for a higher monthly payment
and still save money.
What if you want out early?
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Several fee-based Web sites,
including LeaseTrader.com and swapalease match
people who want to get out of a lease early with
those who want to assume a short-term lease.
At LeaseTrader.com, you pay a fee of $90 to post
your vehicle and $250 to complete the transfer of
the lease.
Sources
http://www.kiplinger.com/article/cars/T00
9-C004-S001-five-myths-about-leasinga-car.html
 http://www.kbb.com/car-advice/carbuying/step-1-know-your-shopping-style/
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