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Are Auto Loans Through A Car Dealer A Good Idea?

Auto Loans Versus Auto Leases

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Top Consumer Reviews Articles

TopConsumerReviews.com provides unique articles that you won't find anywhere else on the internet. These articles are designed to help you make the most informed decisions possible.

Auto Loans Versus Auto Leases

Auto industry statistics indicate that 80 percent of auto buyers either pay cash for their purchase, or finance it with a loan issued either through the dealer or a private financial institution. However, there is a small percentage of people who do not prefer to buy a vehicle, but rather prefer the option of leasing.

If you are in the market for a new automobile, you may be wondering whether owning or leasing is the best option for you. The choice depends on a number of factors.

Some of the reasons why people prefer buying over leasing include:

  • Leasing hidden costs. First and foremost, leases eventually must be returned, and lessees can find themselves paying out of the nose for hidden costs they weren’t expecting. One such cost is mileage. Most leases come with a pre-determined mileage limit. Lessees who exceed the mileage limit for the term of their lease will end up reimbursing the auto dealer the current mileage rate per mile for every mile beyond the lease’s limit. Most three-year leases provide a 36,000 mile limit. For the average driver, 12,000 miles per year may not be enough, particularly if you travel for your job.
  • Maintenance. Another benefit to buying versus leasing is that even while leasing, you are responsible for the maintenance of the vehicle. While most leases come with warranties that will cover the cost of most major repairs, those leases do not extend to routine car care such as replacement tires/tire rotations, oil changes or other fluid replacement. Essentially, the lessee will be paying to maintain a car that he will be returning for someone else to enjoy later.

Some of the reasons why people prefer leases over ownership include:

  • Lower monthly payments. Because the vehicle is technically being “borrowed” for an agreed-upon period of time, rather than being purchased outright, monthly payments tend to be lower on leases. The payments also are lower because the lessee is only paying for the depreciation of the vehicle’s worth, rather than the value of the entire vehicle. However, at the end of the lease term, the lessee doesn’t own anything.
  • Driving the latest model. Some people always want to be seen in the latest model car. They’re willing to put up with a constant monthly lease payment so that they can trade their car in every 2 or 3 years for a newer version. While people who choose to own a car look forward to not having a car payment, these individuals are comfortable with budgeting for lease payments forever.

No matter which option you choose, make sure you fully understand the benefits and drawbacks to each of them before signing on the dotted line.

How the Fed Rate Increase Affects Your Mortgage, Car Loan and Credit Card Bill

The Federal Reserve's decision to raise its benchmark interest rate on Wednesday, the fifth increase since the financial crisis, will probably reach beyond Wall Street and into most American homes. Anyone with a credit card will see a small but instant ...

Published:  Wed, 13 Dec 2017 10:42:00 GMT



How a Fed rate hike could impact your auto loan

The short answer is "yes." However, it's not a perfect correlation. In other words, don't expect auto loan rates to increase by the exact amount the Fed raises the federal funds rate target range. There are certain consumer interest rates that are directly ...

Published:  Wed, 13 Dec 2017 12:03:00 GMT



How to throttle down on car costs and save thousands

As with insurance, shopping around can save you a lot of money. And make sure to look at options outside of the car dealer's financing. Sometimes the manufacturer might offer the lowest rate, but other times the better option might be a bank or credit union.

Published:  Tue, 12 Dec 2017 04:59:00 GMT



Subprime shrinks in Q3 auto loans

The share of subprime and deep subprime new-vehicle loan originations in the third quarter hit its lowest level since 2012, while prime and super prime loans continued to make up nearly three-quarters of the market, according to Experian's latest State of ...

Published:  Thu, 07 Dec 2017 13:00:00 GMT



Save time, hassle, and money with our guide to painless car buying and leasing

Federal law guarantees you one free credit report each year. Next, you need to shop around for the best loan rates. The car company might offer the best deal. Your dealership's Finance and Insurance department might be able to get you the best rate.

Published:  Wed, 13 Dec 2017 06:00:00 GMT



Subprime Auto Loans Decline in Third Quarter, Experian Says

The percentage of subprime vehicle loans dropped in the third quarter to its lowest level in five years, a trend that credit-reporting company Experian says disputes the notion of a pending bubble. "For some time now, the story has been focused ...

Published:  Sat, 09 Dec 2017 06:14:00 GMT



Smartphone app AutoGravity lets consumers get preapproved for auto loans

Valerie Cusco said her husband warned her not to fall for a scam. She really, really wanted a new car. And her birthday was coming. And she didn't want to wait. And she was excited. So she surrendered all her personal information and, well, it turned out OK.

Published:  Mon, 11 Dec 2017 20:00:00 GMT



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