The best financial decision for 2016 is whether to lease or purchase a car

Just two short decades ago, if you asked someone if they leased or bought their car, their answer would most likely be “lease of course.” The auto industry also experienced a decline when the market collapsed. The 2009 financial collapse altered how people bought, sold, and leased cars.

Not everyone is lease-crazy, but it’s still a common choice for people with a car allowance. Nowadays, fewer people choose to lease their cars. It makes more sense to buy a car than to lease one now that interest rates are so low.

In theory, renting is a fantastic idea. You can travel in the car of your dreams while still being able to afford it, similar to borrowing a car. When compared to monthly car payments, leasing a car can be a reasonable option for people who want a higher-end vehicle but still want to stay within their monthly budget.

Many people have been disappointed with their leases, which is the issue. Leasing was not economical when interest rates were low and borrowing money was less expensive. For many, not having any equity in the vehicle at the end of the lease didn’t seem like a wise financial move.

People have been choosing to buy cars over the past 20 years despite having less disposable income, and they are buying more used cars as well. Many people understand that saving money by purchasing a car that is only two years old and in excellent condition is preferable to paying full price for a brand-new vehicle. Disappointed that simply driving a brand-new car off the lot is a loss, they realize that a used car with low mileage could be a much better investment.

What will 2016 bring for auto sales?

It has been suggested that the Fed will raise interest rates this year. Because of the market’s stability, many are speculating that an interest rate increase is imminent because they observe the interest rates’ historical stagnation. Everyone is just speculating; nobody truly knows whether it will occur or not. Why is that crucial? If interest rates rise, it might make it harder to get a loan and result in significantly higher rates for loans for new cars.

People are more likely to steer clear of buying not only a new car but also a used one if interest rates for buying a new car rise. Leasing might once again seem like a sensible choice if a buyer can’t get the car they want without forking over a significant amount in finance charges.

For many, the choice will come down to how much money they have to spend, how much it will cost to finance, and which one is a better buy for their financial situation. Leasing may, however, once again become a more popular choice if interest rates start to rise, according to the majority of experts.

Which one benefits you as a car buyer?

The rate of technological advancement is so rapid that you can hardly get a car home before it has been upgraded and has more bells and whistles than you had hoped for. With leasing, you can buy a car and only keep it for a short while, saving you the hassle of having to trade it in for a newer model after a few years.

If you plan to buy a new car in 2016 but don’t want to shell out extra money for repairs like auto body work, you might want to lease instead and wait for a while until technology catches up. Because innovation will soar in a more vibrant market, you don’t want to be stuck with a pricey car that becomes quickly out of date.

If you don’t care about extra features and just need a dependable vehicle to get you from point A to point B, you might want to think about buying one. Purchasing a new car may make sense if money stays cheap. It will keep you from having to make more expensive repairs, and it typically comes with a warranty that will last you for the next couple of years.

Consider trading in your current vehicle and purchasing an older, used model if you don’t want to be saddled with a sizable monthly car payment. Due to improved automotive design and engineering, cars frequently exceed the 100,000 mile mark.

You can probably find a car that will get you to the next decade without breaking the bank each month. Additionally, you need not make any sacrifices because many used cars are incredibly affordable.

So, leasing or buying a car is the future? It really depends on how interest rates behave, how stable the economy is, and what your overarching objectives are. You might just want to wait until the new year, or possibly the election, if your car is in good working order and you have the patience to wait, to see how the economy performs.

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