4 things to consider when buying a vehicle
(BPT) - The pandemic changed our travel habits considerably, and forced us to reconsider how we get around safely. For example, the latest Hankook Tire Gauge Index found that three-quarters of Americans don’t feel comfortable taking public transportation because of the coronavirus pandemic, leading more people to get behind the wheel.
This increase in drivers is having an impact on our car buying decisions: Data showed that 44% of Americans have already considered a new vehicle purchase. Many are likely to be first-time car buyers, too, as over half of Gen Z and millennials are thinking about a new vehicle purchase.
In addition to the usual considerations when buying a vehicle — cost, performance, safety and reliability — the events of 2020 have raised new questions. After a year of significant change, here are four things to consider when buying a new vehicle.
Your vehicle is just as much about comfort as it is mobility
We’re spending more time in our cars, even when we’re not going places — waiting in parking lots for grocery orders, lining up at drive-thrus, or even taking a conference call when home gets a little too noisy! So a vehicle’s interior should be a nice place to spend your time.
The good news is that there are plenty of standard features and affordable options to make that possible. The Gauge Index found that Americans consider everything from Bluetooth connectivity (62%) and in-dash navigation (57%), to remote and keyless start tech (56%) as important factors when choosing their vehicles.
Self-healing tire technology was also rated as an important feature by 56% of Americans — a useful feature at any time, and crucial when one may not want to come into close contact with others for an emergency tire change!
Is it finally time to plug in?
With increased range, lower prices and expansions in charging infrastructure, electric vehicles (EVs) are increasingly becoming a choice for drivers, with 62% of Americans likely to consider an EV.
Deciding if it’s time to go electric means considering a few important factors. The first is range: What do you anticipate to be your regular mileage between charges? The average range of today’s electric vehicles should be more than enough for daily commuting, errands and even the occasional afternoon road trip.
Then, make sure you have access to charging infrastructure at home and at your frequent destinations. And calculate the true financial benefit, taking into account rebates, credits and a newfound freedom from the petrol pump.
Take time to kick the tires.
When buying a new vehicle, check the tires it comes with to ensure they’re best suited for the weather conditions where you live. This is especially important when driving regularly in inclement weather where an all-weather tire like the Hankook Kinergy 4S2 can save you money down the road. Less than half (47%) of Americans can accurately identify the difference between all-weather and all-season tires, so here’s the cheat sheet: All-weather tires manage rain and snow while also delivering year-round performance; all-season tires prioritize comfort and fuel economy over ice and snow traction.
If you’re switching to electric, your tire choice could impact your ride comfort, mileage and road noise. These are already important for a regular vehicle but for an EV, where range is key and there’s just the quiet hum of the electric motor, you’ll want to pay extra attention to these features on your tires.
Looking ahead, post-pandemic.
With a new year on the horizon and the hope of restrictions easing in 2021, it’s important to ask if your vehicle needs now will be the same in six to 12 months’ time.
That’s because a vehicle purchase isn’t just for a few months; it’s a lengthy investment that brings insurance, registration and maintenance responsibilities. If a new vehicle purchase only serves your needs now, it may be worth managing with what you have for a few more months.
The past year has been one of change and upheaval. So if that means it’s time for a new set of wheels, these questions will help you not only choose the vehicle you need, but the driving experience you want, for the years ahead.
(BPT) - If you’re in the market for a new car, you might be thinking about leasing. After all, it seems very attractive on the surface — so attractive that leases accounted for one-third of all vehicles sales nationally in 2016. Taking a closer look though, you may be surprised to see there's more than meets the eye in some lease offers. So, here are a few need-to-know nuggets about leasing a car.
Cash up front is required.
If you're thinking that leasing gets you out of needing cash for a down payment, think again. That low monthly payment you’re after comes with upfront costs like taxes, registration, tags and other fees all due at signing. This could cost you thousands of dollars. And, if you want to lower the monthly payment even further, you’ll have to put additional funds toward the cost of the lease to get your payment where you want it to be.
Bells and whistles cost extra.
Just like when you’re buying a new car, the extras cost more. Advertised lease specials are usually for the base model — not the one with the navigation and safety packages you’re probably coveting.
Adding on all the bells and whistles to your vehicle will mean higher payments because that raises the price of the car. Again, you may have to put an additional deposit down to land the payment you think you can afford.
Not owning means no asset.
Leasing is basically renting a car for an extended period of time — three to five years or so. Unlike buying a car, you won’t have an asset at the end of your lease. Which means you’ll have a decision to make: pay the residual value (the value of the car at the lease's end) to own the car outright, finance the residual or turn in your leased car for another. Regardless, you’ll again need the cash for a down payment or the upfront costs for your next lease — whereas with buying a car you'll have a definitive end to monthly payments. Once your loan is paid off, you can put that money toward savings or paying down debt. Or, you can use your car as a trade-in on another ride or for cash if you ever need to sell it.
Once you're in it, stay in it.
If you get halfway through your lease and decide it’s not for you, you’ll be charged for early termination, something to keep in mind if your financial lifestyle changes often. In some cases, you might be required to continue to pay all regularly scheduled payments or your credit could take a hit.
Understand complex negotiations.
Understanding how a car loan works can sometimes be difficult for a first-timer, and things get even more intricate when you lease. Here are a few terms you may hear during lease negotiations:
Capitalized cost: Cost of the vehicle today.
Lease term: Length of the lease, usually expressed in months.
Residual value: Vehicle’s expected value at the end of the lease.
Depreciation: The difference between the capitalized cost and residual value.
Lease factor, or money factor: Cost of leasing, or interest — usually expressed as a very small number such as .003. Multiply this number by 2,400 to get your interest rate. In this example, that’s 7 percent. As a note, interest rates on leases tend to be higher than those on auto loans.
If you want to ace your lease negotiation, you should study the vocab and have A+ credit, too. You may not get the best deal if you’re unsure about your credit score, leasing terminology or the calculations mentioned above.
Mind your miles.
Depending on how often you get behind the wheel and how far you go, you could be forced to make some lifestyle changes if you lease. Most leases cap mileage somewhere between 10,000 and 15,000 miles per year, or a total of 30,000 to 45,000 miles. Driving over this limit could cost you up to 25 cents per mile.
If you drive 30 miles round-trip for your commute, you’re traveling 150 miles over a five-day workweek. That’s nearly 8,000 miles just driving to work each year — 24,000 miles over the course of your lease. Depending on your limit, that doesn’t leave much wiggle room for things like road trips, traveling to sporting events, chauffeuring the kids to extracurriculars or even grabbing a bite to eat downtown. Those things could be taken off the table if you lease. If the freedom of driving whenever, wherever is something you enjoy, a lease may not be the best option.
The choice is yours.
Leasing might be for you if you want to drive a new car every three to five years, can drive within the limits and maintain good credit. On the other hand, today’s cars can easily last 10 years if maintained well, and once fully paid for, allow you to sock away monthly payments for other things. There are sites that offer side-by-side comparisons of buying and leasing to help you make the right choice.
This calculator from Navy Federal Credit Union is just one example. In the end, it's up to you. Armed with the details on the real deal of leasing and your buying options, you're on the road to making the right choice.
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