Are you contemplating buying a new car, but entangled in a tough call whether to buy a new car or lease a car and postpone the buying for now. Well, being an owner will see an increase in the monthly costs initially but in the end, you will own it.

On the other hand, leasing a car will call for smaller monthly payments but this will be incessant until you give away the leasing.

According to sources, the leasing has taken over owning a car a few years ago, and does not look like the trend is going to end anytime soon.

Many converging trends have influenced the car leasing landscape. Although a few decades back, luxury cars dominated the new-car leasing market, contemporary leasing trend has witnessed a paradigm shift with many compact cars, sedans, and small SUVs ushering in the new-car leasing segment in the marketplace.

Automobile manufacturers have spotted a new marketplace for leasing out new cars that boosted car production to grab a bigger pie in the new-car leasing demand.

The best thing, you can give away the leased car any time before or at the end of the lease.

Interest rate forms and a substantial part of the leasing cost. The benefit of low-interest rates prevailing elsewhere has entered into the lease contracts as well, benefiting the end-users in the lease market.

The leasing is growing steadily in the past 36 months as mixed blessings. Leasing is good for users repellent of getting tied up in a long contract, the flexibility of car loan allowing stretching the loan to tame the monthly repayment of loan amount making users slanting towards new car buying.

The market dynamics will take the final call between new car loan based buying and leasing, here are some major differences between purchasing & leasing to help your way ahead.

From The Ownership Perspective

You own a new car and own it for lifelong convenience. On the other hand, in leasing, you must return the car at the end of the leasing period unless you but it or renew the leasing contract.

Inescapable Up-Front Cost Factor

Owning a car, new or old, involves cash payment towards the car’s cost including tax & registration fees, and other allied charges. The initial payment involved in leasing is high that includes the down payment, initial payment, a security deposit, an acquisition fee, tax & registration, and other fees. But over the period the payment tapers off for leasing which may not for buying a new car.

Monthly Payments involved in both Buying and Leasing

Usually, payments for loans are relatively higher than lease payments. A loan amount includes the total purchase price of the car, interest, taxes, fees, and other finance charges which are sizeable. Lease payments do not include the entire cost of the car, hence much lower than the cost of the loan. Leasing payments involves the cost of the vehicle’s depreciation during the lease period, interest or rental, taxes, and fees.

Early Termination of Ownership or Leasing Contract

You are free to sell your car off or trade-in your car at any time you wish. In fact, during the financial crisis, you can pay off your loan by the money from the sale. During the leasing period, you are free to surrender the leasing contract or can be revoked under mutual agreement. However, revoking leasing early would be dearer to you as termination charges are high. The condition may seem easy if the dealer buys the car from the leasing company as a trade-in and letting you go off the contract.

From the Future Value Perspective of Owning and Leasing

An owned car depreciates adding cost reduction to the future sale price, but whatever cash value it carries, it is all yours to use it as you like. On the leasing front, in all fairness, the future value of the car does not make much difference and does not affect you financially as much as it does for the owner. That said, you do not hold any stake in the vehicle.

Mileage is a determining factor in both Ownership and Leasing of a Car

As an owner, no one will stop you from driving as many miles as you wish to travel, but be mindful, higher the mileage, the lower would be the resale or trade-in value of your car. In leasing, the terms & conditions limit the number of miles you can travel often 12000 to15000 in a year. During the inception of the contract, you can negotiate to settle for a higher mileage limit at a certain cost. You need to be aware the exceeding limits will result in charges that you eventually need to bear.

Excessive Wear & Tear during Ownership or Leasing

As an owner, you saved from worrying much about the wear and tear if you choose to. However, wear & tear will certainly impact future resale and trade-in value. In Leasing, wear & tear is a serious issue and you will be held responsible for any. You will end up paying extra charges for surpassing what is considered normal wear & tear. During the leasing period, you need to take very good care of the vehicle.

End of Term Ownership or vehicle return at the end of the leasing

As an owner, when the loan term ends, you are free from any further payment responsibly. You should be happy to have garnered equity and laid the foundation for the purchase of your next new car.

You may choose the lease period between two and three years. You may return the vehicle when the lease period gets over.

Customize your car during Ownership & Leasing

As an owner, if have every right to modify, revamp, or customize your car that complements your demeanor, however, doing so may discontinue the warranty of the vehicle. Under leasing, you are obliged to return the car at the end of the leasing contract/period. You need to ensure that you maintain the car and return it in the original condition or better sale-able condition. Any modification or customization causing any damage, you need pay the cost of fixing to restore the condition.  You may take help of the insurance and pay the residual.

The post Leasing vs. Buying a Car – The changing Landscape first appeared on VinFreeCheck and is written by Jason Mason

Asking Price

This is the price you are most familiar with; it’s the price that the seller is trying to get for the vehicle. Just because someone is asking that much for the vehicle doesn’t mean it’s actually worth that much. Often sellers will ask more for a vehicle then it’s worth, knowing that it will likely get negotiated down.

Before you buy a car, find the true market value for that car, and negotiate down. It doesn’t matter how much the seller is asking for, because their only goal is to make as much money as possible.

The Takeaway: The asking price is the starting point for your negotiations. Barter, barter, barter!

Dealer Price

It’s just what it sounds like. The dealer price is the price that the dealership is trying to sell the vehicle for. This doesn’t mean that it’s a fair price, and it doesn’t mean that the dealership won’t sell it for less. In fact, dealerships almost always price the vehicle for more than they expect to sell it for.

Also, there is no “set” dealer price. So, one dealership might have a used car priced at $7,000, and another dealership might have an identical vehicle priced at $9,000. The dealer price really doesn’t mean much if you do your homework because most dealerships will come down to the true market value of the vehicle you are looking to purchase.

The only difference between a dealer price and an asking price is the person selling the vehicle. A dealership has a dealer price, and an individual has an asking price.

The Takeaway: The dealer price is the asking price; always negotiate it down.

Kelly Blue Book Value

The Kelly Blue Book (KBB) Value of car is a bit of a misnomer. That’s because KBB is a service that can provide you a wide range of values for your vehicle. It’s a valuable tool that can let you know how much your car is worth and what you can expect to get for it depending on how you plan on selling it.

When you look up a car on KBB, there are three different pricing options that you can see. The first is an instant cash offer, this is typically the lowest amount, and it’s just what is sound like. KBB will provide you an offer for your car, and you can sell it for that price guaranteed.

However, there are some other ways where you could make a little more money. The next offer it provides is the trade-in value. If you’re taking your car to a dealership and trading it in for a new one, this is the amount of money you can expect from them. If they’re offering you anything less, then they’re trying to rip you off.

The third and final price is the private seller value. This is the price that you can expect to get if you’re selling your car yourself to someone else. There’s no middleman, and this is the most that you can fairly get for your vehicle.

However, when you’re looking to buy a used car, the number you should be looking for on the KBB site is the private seller value, regardless of whether or not you’re buying the car from a dealership or an actual private seller.

That’s because the “private seller” value is really the true market value for your car, and that doesn’t change depending on who you buy it from.

The Takeaway: Always KBB your car before you go to sell. Dealerships use it, and you should too!

True Market Value

Whether you’re selling or buying a used car, the most important value you can know is its true market value. A vehicle’s true market value is the amount of money that other people in your area are paying for similar cars.

That makes it the most critical number to know because if you know what other people are paying, you know how much to expect to make or spend on the used car you’re looking at purchasing.

A variety of factors determine your car’s true market value: the condition of the vehicle, the amount of mileage, the age of the vehicle, the type of vehicle, and even where the vehicle is being sold all influence this amount. It’s why a used car in Los Angeles is valued more than that same used car in El Paso. This is the number you need to keep in mind when you’re negotiating.

The Takeaway: This is the price you’re trying to get under if you’re buying a used car. If you’re selling a used car, then you want to make more than this. It’s also known as the KBB “private seller” value.

Trade-in Value

You might think that a dealership will give you a deal if you’re trading in a car and buying a new one there. You would think wrong. When you trade-in your vehicle to a dealership, you’ll make less money than if you sold it to a private party.

That’s because when you trade-in your old vehicle, you’re essentially selling it to a middleman. It doesn’t matter that you’re giving the dealership money on your new car; they want to profit off of you twice. With a trade-in, you’re giving them that opportunity.

That’s because dealerships will resell your car, and they want to make as much money as possible off of it. They’ll make money off of your sale and off of the resale of the car you traded-in.

Because of this, your car’s trade-in value usually two to three thousand dollars less then it’s private party value.

So, why would anybody trade in their used vehicle? Because it’s a lot easier than trying to track down a buyer yourself. The dealership can just throw it on the lot and wait for a buyer to find them, and you don’t always have that kind of time.

The Takeaway: Trade-ins are quick, but you’ll get several thousand dollars less than if you found a private seller.

Wholesale Value

If you’re a private seller, then this number doesn’t matter to you. In fact, if you’re looking to buy a used car, then this number is irrelevant. But you might hear it get tossed around, so it’s good to know what it means, so you don’t feel like you’re in the dark.

A car’s wholesale value is the amount of money a dealership spends to buy a vehicle from the manufacturer. Of course, dealerships don’t buy used cars from the manufacturer, only new ones.

This number is usually kept under wraps because if you can figure it out, you can determine how low a dealership will be willing to go when selling a new car. Of course, the dealership wants to make as much as possible, and everything they make over the wholesale value of the vehicle is their profit margin.

The Takeaway: The wholesale value doesn’t apply to used cars. It’s the amount of money a dealership pays to the manufacturer to buy a new car.

If I’m a buying – what’s the fair price?

When you’re going to buy a used car, you need to do your homework. It doesn’t matter if you’re buying a car from a dealership or a private seller; tons of people are looking to rip you off.

The first thing you should do when you find a vehicle that you’re interested in is to look up the value on Kelley Blue Book. The amount you’re going to be interested in is the private seller value. Also, make sure that you’re accurate with the vehicle’s condition, as this can have significant implications for the vehicle’s value.

Also, never take the sellers word on what the KBB value is. You’ll often see sellers post pictures up of this value, but this doesn’t provide any context. There are a ton of factors that can affect the KBB that you won’t see on the final screen. Vehicle options, condition, and even location can drastically change the KBB value. Always check for yourself to see what the vehicle is worth.

After you’ve determined that you’ve found a good deal, you need to run a VIN check on the vehicle. Sites like VINfreecheck.com can do this for you for free. This will check the vehicle’s title status if it’s been in any accidents and even the number of owners that the car has had. If this all checks out, you can move onto a full VIN report.

These reports will let you know everything that’s ever been reported about the vehicle. From maintenance histories to detailed accident histories, if it’s been reported, it’s there. Once you’ve done all this, you’ll still want to take the vehicle to a mechanic to check out before you buy it.

If you’ve done all this, you won’t be getting ripped off. Yeah, it’s a little more work, but it’s worth the peace of mind that comes with getting a good deal.

If I’m selling – What’s the fair price?

When you’re selling your used car, you want to make sure you get what it’s worth. If you’re looking to move it quickly, you can take it a dealership or sell it to Carvana, but you’re going to make less money than if you take the time to find a buyer yourself.

That’s because you’re taking the car to a middleman, and they’re going to take their cut. No matter who you’re looking to sell your vehicle to, you need to look up the car’s Kelly Blue Book value. This is the same tool that dealerships use to value their inventory, so you need to know what you’re working with before you head into negotiations.

From there, always list your car for more than you’re expecting to get. So, if you’re trying to sell your car for $10,000 and the KBB private seller value of your vehicle is 9,000 – 12,000 dollars, list it at $12,000.

You better believe that the buyer will try and negotiate you down, and if you have a little wiggle room built into your price, it’ll be easier to get what you want for it. Even better, if you do well in negotiations, you might even end up making a little more than you were expecting on the sale!

Even if you’re planning on trading in your car, you’ll want to have a rough idea of the trade-in value before you ever set foot into a dealership. The dealership might try to make you feel like this side of the transaction isn’t up for negotiations, but it is.

And if you can prove that your vehicle’s trade-in value is worth the amount of money that you’re asking for it, the more likely you will be to get a fair trade-in value. Because the dealership will try and make as much money off you as possible, and that includes the amount of money they are spending on your trade-in.

Wrap-Up

The quickest way to lose out on a ton of money is to go into a car sale blind. When you don’t know what you’re talking about, you’re a prime target to get ripped off. The good news is, you don’t need to know everything about mechanics, or even cars, to make sure that you’re getting a good deal.

The biggest tool at your disposable is Kelly Blue Book. It’s what all the dealerships use, and if you go into negotiations with all the same information, you’ll be far less likely to get ripped off. With a little research and determination, you can get a great deal, whether you’re selling or buying a used car.

The post Understanding Used Car Prices – Don’t Get Ripped Off first appeared on VinFreeCheck and is written by Jason Mason

Rebuild your credit score first

You will need to improve your credit score as much as you can before you visit your bank or lending institution. You will need to order your credit reports and verify that the information on the credit is correct. If the information is not correct, you will need to get the mistakes corrected. Pay past-due and small judgments accounts off. You will need to wait for some few months after cleaning up your credit reports before you present yourself to buy a car on credit.

Set realistic expectations

You will need to set realistic expectations. Cars bought on bad credits don’t come cheaply. Be prepared to pay higher down payments and higher interest rates. You will need to prepare your budget in advance. Make sure you have listed down all your monthly income and expenses. Calculate to see how much you will be remaining with as your monthly payment for the car loan.

Avoid “bad credit specialists”

Once you have known your credit situation and calculated your budget and known how much you are able to set aside for your car, work with mainstream lenders and auto dealers. A good dealer will put you into a high-interest loan if you have a bad credit, but bad-credit specialists will always promise you deals that are destined to fail. If you are dealing with a bad dealer, and you miss one monthly payment, they will be looking to repossess your car.

Explore nonprofit lenders

If you plan to purchase a car with a bad credit, you can also consider loans offered by nonprofit lenders because they come with low-interest rates. For instance, the Capital Good Fund offers car loans for purchases made in specific states. Search to see which nonprofit lenders give car loans to buyers with bad credit.

The post Buying a Car with Bad Credit first appeared on VinFreeCheck and is written by Jason Mason

Factors that you have to live with

Age

If you are younger than 25 years, most insurance providers will charge you higher insurance rates because you are likely to cause or get involved in an accident. Various studies show that people aged between 40 and 70 years are less likely to cause an accident compared to their younger counterparts.

Gender

If you are a man, you will be charged higher insurance rates. Statistics show that women drivers drive safely compared to their male counterparts. Studies also show that the cowardice nature of women makes them make informed decisions when driving their cars, thus causing fewer accidents.

Marital Status

Marital status also goes into determining the rate of insurance that an individual gets. Married individuals always get lower interest rates when they apply for insurance than single individuals.

Changeable Factors

Place of residence

If you live in congested urban areas with a lot of traffic, you are likely to pay higher insurance premiums than a person who live in a rural area. Also, if you live in areas with higher crime rates you are likely to pay higher insurance rates.

Driving Record

If you receive several citations and moving violations on your driver’s record, you will be termed as a ‘unsafe’ driver and will be forced to pay higher insurance premiums. You must, therefore, ensure that your driver’s record is always clean.

Type of Vehicle

If you have a less expensive car, you will pay lower insurance rates. If you own a car model that is prone to accidents, you will likely pay higher insurance premiums. If you own a car that is fitted with safety features, you are likely to pay lower insurance premiums. So the type of car that you own goes towards determining your car insurance premiums.

Accident Claims

If you have not caused any accident, or you were involved in an accident in which you were not at fault, you are likely to pay lower rates when you apply for insurance cover.

The post Factoring Car Insurance Rates into Your Budget first appeared on VinFreeCheck and is written by Jason Mason

Financing Charges

When you are financing your vehicle, it means you are paying a certain amount of money monthly for a predetermined number of months. The amount of these monthly payments vary depending on the down payment made, the loan’s interest rate, and the terms of the loan. Typically, lower interest rates are offered when buying a new car than a used car.

Leasing Charges

If you are acquiring a car on lease, it means you will be paying certain amount of money monthly or yearly. If you compare lease payments for the same car model between different car dealerships, you will find that some dealers are charging more than others. You will need to consider factors like lease term, capitalized cost reduction and annual mileage limit before making leasing a decision.

State and Local Tax Rates

Buying a car in your current city or state may help you save the money that you would have paid as state or local tax rates. However, most states have laws that dictate buyers to pay sales tax on new vehicles regardless of where the transaction took place. These laws are meant to protect local government budgets and business. If you are considering to buy a car from an out-of-state dealer, be sure to determine all hidden taxes or potential tax benefits from that dealer.

Tax Credits

Electric vehicles and plug-in hybrid models cost more to purchase than regular models. However, these vehicles may be eligible for local, state, or national tax credits. Lower operating costs and tax credits are designed to make these vehicles cost-effective to owners. In cases where your locals are not getting any tax credit, you will find yourself paying more than what you had budgeted for the vehicle.

State Registration and Licensing Fees

Each state has its own vehicle registration and licensing fees. These fees also vary depending on a variety of factors such as the vehicle purchase price, year, weight, taxable value, model, make or owner’s driving record. Local vehicle registration and licensing departments also take other factors into consideration like your county of residence when determining your fees. Be sure to dig deep to understand these fees before you dish out money to buy that car.

Insurance Premiums

Each state requires car buyers to purchase a minimum insurance cover for their vehicles. A minimum insurance is needed to cover the cost of personal injury and property damage caused by your car. There are also other optional insurance covers that you might consider purchasing to cover you more from other potential issues such as car thefts, flooding or damage.

Fuel Economy Ratings

Gas prices are always unstable. They fall, rise and fall again sometimes. Whenever gas price rises, many drivers complain bitterly as if the act caught them by surprise. Even if it is not easy to calculate your future fuel costs, you will need to create a budget for it and know that there might be hidden costs that can tamper with your budget.

Maintenance and Repair

Any car whether used or new requires maintenance or repair at some point. Some repairs may be covered by a warranty. What about those repairs that are not covered by warranties? What about car maintenance practices like oil changing? All these are hidden car buying costs that you will need to take into consideration when buying a car.

Depreciation costs

Car depreciation is the amount of value your car loses each year. This value impacts you when you decide to sell your car. Some models have lower depreciation value than others. You will, therefore, need to consider this hidden car buying costs before choosing your car model.

The post Identifying Hidden Car Buying Fees first appeared on VinFreeCheck and is written by Jason Mason