What’s the Best Way to Pay For Your Next Car?

Although we know that the fun part of shopping for a car is looking at different models and taking a test drive or seeing what an impressive Jeep can do here at our test track; figuring out financing is just as important, even if it’s not what most of our customers are looking forward to. In fact, we probably get more questions about financing than about the various models we sell. It’s easy to find specs on a new Wrangler, but good financial advice can be a lot harder to come by. We have people come to us every day saying, “Help! How do I value my trade?” or asking us about the best way to pay for their next vehicle.

We’re going to help get ahead of some of those questions and go over some of the basics you should keep in mind while trying to figure out how to afford your next new or used vehicle. In particular, we’ll focus on whether leasing or other kinds of financing would work best for you and what they offer. We can’t tell you exactly what you should do here since it depends on your needs and situation, but we’ll point you in the right direction. Of course, if you have more questions, feel free to give us a call, and we’ll help you with everything you need.

Different Types of Financing

The first thing to consider, as you’re trying to figure out the best way to pay for your next vehicle, is what your options are in general. You might have more options than you realize, particularly if you have a high credit score and good credit overall. Some of these will depend on the type of vehicle you’re interested in (more on that later), but in general, you have three main options available to you regarding financing:

• Pay Cash – If you have the money to pay for a vehicle completely, then this can be a good option for you. Despite the name, you do not need to actually bring thousands of dollars in cash to a dealership. You can work with a dealer to use a money order, bank transfer, cashier’s check, or other options that function like cash.
• Auto Loan – For many people, the most common option for paying for a vehicle is by getting an auto loan. You will typically use a third-party lender, such as a bank or credit union, and your rates and terms will depend on your credit score and other factors.
• Leasing – With a lease, you use a new car for a few years and only pay for the depreciation that you’re putting on the vehicle while you drive it. This involves monthly payments, much like a loan, but you’re not actually buying the car, which typically results in lower payments.

As you can see, there are some notable differences between these options; your particular situation will help you figure out which one is right for you. If you have the ability to pay for a vehicle outright in cash, then it can be the best option since you don’t have to worry about interest on a loan. However, most car buyers aren’t in that kind of position, so loans and leases are found in most car sales. The low monthly payment of a lease can be very tempting, and leasing works well for some people, but it’s not for everyone.

Does Shopping New vs. Used Matter?

One of the biggest considerations when figuring out your financing options is whether you want a brand-new or pre-owned model. For either type of vehicle, you can pay cash, of course. The lower price of a used car can make buying it outright a more realistic option for some people than a new model. You can also find an auto loan for both new and used vehicles, so your choice doesn’t impact that too much. Depending on your credit score, you will have a limit on financing, so if your credit isn’t the best, then a used car might be more within your reach than the latest, most expensive option.

The biggest consideration is if you’re interested in leasing your next vehicle because leases are only offered on new models. Part of the attraction of a lease is that it lets you enjoy a new vehicle and everything it has to offer for several years. Once a vehicle goes off its lease and is returned by the driver, it is typically sold as a used vehicle. These have limited mileage and are usually in great condition. So if you’re in the market for a used car, a lease won’t work for you, but buying a car fresh off its lease is a fantastic option to ensure you get a vehicle in excellent shape.

Should You Lease Your Next Vehicle?

For most people, the biggest factor in leasing a vehicle is the question of ownership and how important that is to you. If you’re someone who really enjoys the freedom of owning your car and being able to do anything you want with it, then a lease isn’t for you. When you lease a vehicle, you’re just paying to use it for several years, and at the end of the lease, you have to return it, though you’ll typically have the chance to buy it when the lease ends if you find you can’t part with it. Most people who choose a lease do so precisely because they’re not tied down to a vehicle and can move on after a few years.

If ownership isn’t something you really care about, and you prefer the idea of getting to enjoy a brand-new vehicle every few years, then a lease could be a fantastic option. Keep in mind that leases have limits on how many miles you can put on the vehicle each year, so you’ll want to consider how much you drive and be realistic about whether you can fit that into the limits of a lease. You’ll also need to follow the manufacturer’s service schedule on a leased vehicle, but you should do that anyways to keep it in great shape. If that sounds good to you, then you should strongly consider leasing your next vehicle.

Other Things to Consider

As you’re looking at your finances and how to best afford your next ride, it’s important to consider all of your assets right now. In particular, any car you currently have that you can use as a trade-in will make a tremendous difference regarding your financing situation. A trade-in will reduce how much you’ll need to pay for your next car, which makes your monthly payments on an auto loan or lease much lower than they would be without your trade. If you’re not sure what your trade-in is worth, then you can get an estimate for it right now here on our website.

You should also take some time to understand your finances and what your budget allows when shopping for a vehicle. It’s important not to exceed what your budget can handle and end up with a car that you can’t afford. This is one of the main reasons a lease can be so attractive; if your budget won’t allow buying a new car, then a lease might be more affordable and still let you get the most from a new Jeep for several years. Give us a call at Faricy Chrysler Jeep to discuss your options and your current situation so we can help you figure out your best choice going forward.