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Consumer
Leasing popularity rebounds
MADISON, Wis. (7/3/12)--New car sales for 2013 are expected to increase 30% (moneyland.time.com June 18).  Since most people can't afford to pay cash for a car, most of those consumers will be deciding whether to buy or lease. Almost 20% of today's buyers choose to lease a car rather than take out a loan (kndo.com May 30).

When you lease, you are paying for use of the car. The leasing fee is determined by a set number of miles and/or a period of time. After your lease ends, you turn the car back in and have to make new transportation arrangements.

When you take out a car loan, you make monthly payments until you've paid for the car. These monthly payments are usually larger than monthly lease payments, but you have equity in the vehicle.

According to Livonia, Mich.-based credit union Catholic Vantage Financial, here are some things to consider when evaluating a new car and how to finance it:

  • Driving predictability. If it's hard to know how often and how far you are driving, leasing probably isn't the best option for you. If you drive more than the miles you paid for, you will be assessed a mileage penalty.
  • Financial standing. Owning might not be right for you if you have a bad credit score or if you will struggle to make higher monthly payments.
  • Repairs. Repairs and maintenance are necessary expenses on any car. Look at your finances and decide if you can afford to fix a car on top of your monthly payments.
  • Changing needs. If you're considering starting a family, leasing a fancy sports car isn't practical. Instead, think about investing in a family-friendly SUV. Match the vehicle you select to your lifestyle and driving needs.
  • Personal preference. If you like to change up your style frequently, look into leasing. If you prefer to own your car and the equity that comes with it, buying could be the better option.
Your credit union loan officer can help you evaluate a dealer's finance or lease offer and discuss alternatives. And if you want more information or need help deciding which financing method is better for you, check out the Home & Family Finance Resource Center calculator "Should I Purchase or Lease" and listen to "Auto Financing 101."


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