Leaves aren’t the only thing falling this time of year. Prices on new cars tend to hit the ground as car dealers look to make room for next year’s newest models. If you are searching for a new ride, BBB offers some year-end car buying and leasing tips.
Buying Year-End Models
If you plan to keep the car for more than five years, consider purchasing a “year-end model”. It may come loaded with rebates and incentives. After five years, the difference of a year between cars in similar condition and mileage is most often less than $1,000.
If you want to lease a new car, again, the year-end model should have tons of rebates and incentives, and costs per month should be lower on the 2011 than the 2012 vehicle.
Know What You Have and What You Want
Determine your current car’s value using the Kelley Blue Book. This may help you decide if you should trade or sell your car.
There are 2011 models (such as a Cadillac DTS or STS) that are discontinued which mean big time savings, but could make future service a bit pricey. Ask your dealer if they are aware of any expected “makeovers” to your new car.
Lease or Buy- A Financial and Personal Decision
Leasing and buying a car usually requires a down payment, registration and other fees, but leasing a car is most often a lesser monthly payment because you are only paying on a “portion of a vehicle’s cost.” This is important to those whose personal priorities are “high end” or luxury vehicles. If you intend to buy the car at the end of the lease, leasing may allow you to start with lower payments at the onset, but it is nearly always more expensive to lease than buy outright.
Lease if you want a new car every 3-4 years; lower monthly payments; don’t care about ownership; have a predictable lifestyle; drive an average number of miles and properly maintain your car. If you are a business owner and can write off your lease payment as a business expense, then leasing is a good option. The biggest drawback for many is the mileage cap that limits drivers to 12,000-15,000 miles a year. Expect additional charges if you exceed your contract’s limit.
Buy if you hold on to cars to build up trade-in or resale value; want to have ownership of your car; like being payment-free for a while; don’t mind (and are prepared) for the unexpected cost of repairs after the warranty has expired; and drive more than average miles per year.
If you consider leasing, be sure and ask about early termination penalties, over mileage costs and excessive wear clauses.