I Still Can't Decide

Here are a few points to keep in mind as you weigh your decision:

• Leasing is best when you expect to put less than 15,000 miles per year on the car, and when you plan to replace the car every three to four years.
• You may be able to negotiate a more favorable interest rate on a loan to purchase a car by going through a credit union, but it will require 10 to 20 percent of the purchase price as a down payment.
• Interest rates for used cars tend to be higher than those for new cars. In general, the new car rate for which you qualify will increase by 0.5 percent times the age of the car (e.g., one percent more for a car that is two years old).
• Insurance payments for a financed new car should be about the same as those for leasing a new car.
• The terms of a lease for a car are set by the leasing company, not the dealer or the manufacturer, so you can get a better deal by shopping around.
• A "zero money down" lease is a misnomer. It usually costs at least $1,000 to drive away in a leased vehicle. This includes the first month's payment, a security deposit, a "bank fee," and a "documentation/prep" fee.
• You still must pay to register a leased car, and the car must be registered in the name of the leasing company, with you as co-owner. You may, therefore, incur costs to register the leased car that do not apply when you buy a car and transfer your registration from your old vehicle.
• Whether you lease or buy, it is always better economically to choose a car that retains its value over time. If you need to trade it in early, you are more likely to get at least what you owe for it.

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