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3 Reasons You Should Buy Rather Than Lease Your Next Car

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I’m often asked on the Compass MoneyWise call-in radio program, should I lease a car instead of buying, because it seems like it’s the cheapest way to go.

 

My answer is always the same: Don’t even think about it! But a lot more people these days are doing more than just thinking about it.

 

The car pricing website www.edmunds.com reports that according to their surveys 27% of all cars in our country are now leased instead of purchased. And Millennials (ages 18-34) lease more than any other age category suggesting that unlike older adults they would rather sacrifice long-term financial benefits of owning an auto to get into a bigger or more luxurious vehicle.

 

Here are the 3 reasons I like to call it care fleecing instead of car leasing!

 

1st, in addition to the monthly lease payment, you’re wacked by mileage fees if you travel over a certain amount of miles. And most people who lease a car do. Guess what? The mileage fees are steep—normally about 12 cents a mile.

2nd, when you turn the leased car back in, if there are any bumps, bruises or scratches, you pay to repair them – big time!

3rd, when you turn the car back in, unlike buying a car, you have NOTHING to show for it.

 

Your best decision is to buy a car and pay if off. Then, continue making the car payments…….but to yourself. That way when you’re ready for a newer car, the trade-in plus the cash you saved should allow you to buy the car for cash and never use car debt again!

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3 Steps to Paying Off Your Car Debt . . . . Forever!

 

 

 

 

3 STEPS TO PAYING OFF YOUR CAR DEBTDo you know that some people never get out of car debt? And it’s one of their biggest obstacles on their journey to true financial freedom. Fortunately, there’s a way to get out of car debt for good by following these three simple steps.

 

  1. Decide to keep your car at least three years longer than your car loan—and then pay off the loan.
  2. After your last payment, keep making the same payment, but pay it to yourself. Put it into an account that you will use to buy your next car.
  3. When you’re ready to replace your car, the cash you have saved plus your car’s trade-in value should be sufficient to buy a car without credit. It may not be a new car, but a low-mileage used car is often value anyway.

 

My wife, Bev, once drove the same car for 17 looooong years. She bought it second-hand and paid cash for it. This was one of the wisest financial decisions we ever made because the average monthly payment on a new car that’s financed is about $385. So, for 17 years she didn’t have a $385 auto payment which saved us $78,540! We were able to use this money to be more generous, get out of debt more quickly, and save invest more.