Car purchase

No one wants to drive away in a dream car only to find that he's heading down a financial road with unwanted sacrifices waiting around every curve. More than one consumer has bought an expensive automobile or truck and then found to his dismay that he couldn't afford to put gas in its tank.

The prudent consumer can avoid this pothole by reading and understanding the fine print of automobile purchases, and weighing the benefits and drawbacks of both purchasing and leasing a vehicle. Here are some issues for you to consider:

• Do you have the money for the down payment that's required by a purchase? If so, you might want to buy.
  
  
• Do you generally prefer lower monthly payments? If so, you might want to lease.
  
  
• Do you like the idea of owning something of value after making payments for years? If so, you might want to buy.
  
  
• Do you like driving a new vehicle-particularly a luxury model-every two or three years? If so, you might want to lease.
  
  
• Do you want to trade in an old vehicle? If so, you might want to buy.
  
  
• Do you hate the hassle of selling your old car every time you want to buy a new one? If so, you might want to lease.
  
  
• Do you like the idea of carefully maintaining your car, so that it runs perfectly for years and years? If so, you might want to buy.
  
  
• Do you put "hard" miles on your vehicle? If so, you might want to lease.
  
  
• Do you eventually want to be free of car payments? If so, you might want to buy.
  
  
• Do you like the idea of driving a vehicle for a few years before purchasing it? If so, you might want to lease.
  
  
• Do you drive tens of thousands of miles each year? If so, you might want to buy instead of paying a relatively large amount of money at the lease's end for exceeding the annual mileage cap, which is generally 12,000 to 15,000 miles.

If you decide to lease, you need to learn exactly what you're paying for in terms of interest rate (it should be close to the current automobile loan rate). You should negotiate the capitalized cost (the price the financial institution pays the dealer for the leased vehicle), the acquisition fee (which the consumer is charged for initiating the lease) and the disposition fee (which the consumer is charged at lease's end if he decides not to buy the vehicle.). Because of all of these factors, professionals advise that low monthly payments don't necessarily translate into a beneficial transaction for the consumer.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.