To Lease Or To Buy?

If you're looking for a new car, listen up; Kelli Grant, Sr. Consumer Reporter for SmartMoney.com, weighs the merits of leasing versus buying.

Even with the recent credit crunch, leasing a car is still possible. If you have good credit, it's possible to find a good deal. Grant advises shopping around for the lender with the best rate, though. There are still people out there who are willing to lend you money - you just have to do your homework.

If your credit is poor, however, your chance of finding a favorable lease is slim to none. Before, "Auto makers were more willing to overlook so-so credit if it meant getting that car off the lot," says Grant. Outside financers want to make money, so if you're a high risk candidate, they're not going to negotiate with you.

If you've had a lease for a while, you may want to look into purchasing. Many big auto makers are now focusing on purchase incentives instead of lease incentives. "If you crunch the numbers, you may find that you're getting a lower monthly payment and a better deal buying than you would be leasing," says Grant.

If you can help it, though, avoid early lease trade-ins. Many SUV and truck values have plummeted, leaving many lease-holders in an "upside down" lease. In other words, they owe more on their vehicle than it's currently worth. That can leave you with a huge bill in the end.

If your lease is up, consider buying the car you're leasing. "They're much more willing to negotiate if you're thinking about purchasing your car at the end of a lease," says Grant. "Ask about a better purchase price and some better financing terms." You may be able to buy your leased vehicle for a lot less money.

For more tips on purchasing or leasing a new car, as well as additional personal financial advice, visit www.SmartMoney.com
By Erin Petrun