The car you have always wanted can finally be yours. With zero down and low monthly rates, could it not have gotten any better?
Leasing a car seems ideal to a large number of students. With appealing deals such as no money down, low or free maintenance and a new car more often, what is there not to love?
A lot, actually. Behind the smoke screen the once exciting deal is no more than a fee-filled frenzy.
Once you are in the leasing habit, monthly payments go on forever. You also have a limited number of miles in your lease contract, which is typically 12,000 to 15,000 miles a year. If you drive over the allotted amount you will have to pay an excess mileage penalty of 10 to 25 cents for every additional mile.
The leased vehicle must be in decent condition or more charges will come. To get out of a lease is worse than paying taxes. ConsumerReports.com said that people who lease may be stuck with thousands of dollars in early termination fees and penalties, which are all due at once.
Why would people want to lease, having known everything that comes with it?
“People want a nicer car than they can afford,” Aaron Christopher, assistant professor of business, said. “BMW leases more cars than they sell.”
Why not save money and get the car you want without a catch? It is easier than you may think.
First, if you do not currently have a car payment, Christopher advises that you make a car fund account in which you put all of the money you would have been paying toward a loan. It is paying yourself rather than a loan company who takes not only the monthly payment but interest as well.
For instance, by putting your monthly car funds into a savings account for a typical financed term such as 44 months and with a payment around $300, in the end you will have saved approximately $13,200. Given, it is not Land Rover money but it will buy you a decent used car in cash, which leaves no monthly payment or interest.
If you are already stuck in a car payment cycle, there is still hope. Christopher suggests that you decide the maximum car payment you can afford to pay and put the rest into a savings account. By the time you pay off your car, the money in the account will have gained some interest. By driving around in the car you already own for two or three more years after it is paid off, you will have enough money to buy another car in cash.
Save up again for a few more years after you drive around your current car and you will have accumulated even more money than before. By the time you are older, your dream car could be sitting in your driveway, interest free.
Now, this only works if you stick to the main plan. Yes, things happen and you may not be able to make a savings payment every month. Remember: good things come to those who wait. By not buying the desired car now while you are in school, paired with school loans, you will at least have a car that you paid for in cash smiling back at you when you enter the real world.