Week 8: Cars: To Lease or to Buy?
Next to our homes, vehicles are typically one of the largest purchases we will make in our lifetime. Buying a vehicle is often an overwhelming and sometimes intimidating task, even for those of us that have bought before. With such a wide range of options, it can be daunting to sort through all of the information.
What to Buy
I will preface this section by saying that I am in this group, and have fallen into this self-imposed “trap” myself. All too often, people, especially young professionals that just got a new job or a promotion, will go out and buy their “dream vehicle.” Look… My job is to sell cars and I can tell you that a year from now, your dream vehicle will be just as accessible, if not more so. Please do not think that I am saying that we should deprive ourselves or not enjoy the fruits of our labor — but if you are stretching that loan out to 84 months to buy that Escalade that you have been eyeing, you had best slow down and look at something more manageable.
Where to Buy
Talk to your friends, family, and neighbors — you will be surprised at how many people actually like talking about their cars and their own experience buying cars! Having an experienced salesperson will no doubt result in a better car buying experience. If someone you know and trust can refer a specific salesperson, that salesperson will typically make every effort to exceed expectations, so they will not disappoint their previous customer, known in the automotive industry as a “referral agent.” If you would prefer to buy at your neighborhood dealership for convenience, get on their website! Most dealerships have all of their staff listed in the “About Us” or similar tab. You never know, your own neighbor or an old friend from school might work there!
When to Buy
Many think that the end of the month, or the end of the year, is the best time to buy a vehicle. While there may be some truth to that statement, it is completely situational and definitely not always the case. Rebates can be stronger in January than they were in December and dealerships need to sell vehicles all month, not just in the last week! It is not unusual to see a frugal and self-proclaimed savvy buyer come in the last week of December to get the best deal and be astonished that every available color choice with every possible combination of options is not still on the lot - after an entire year of sales!
Leasing vs. Buying
While leasing can be a great option, it is not always the best option for everyone. Whether or not leasing is a good option for you depends on your vehicle needs, driving habits, lifestyle, and a variety of other factors. I often hear people say, “I do not like the idea of not owning my vehicle.” My first thought is, “do you own your current vehicle, or does the bank?” Yes, you may have the title to the car your parents helped you buy while you were in college; but speaking from experience, the vast majority of people owe something on their vehicle and many people in that group owe more than their car is worth. Owing more on your car than it is worth means that you have “negative equity.” Leasing is a great way to prevent negative equity and avoid costly repairs on a high-mileage vehicle down the road. Although leasing can be a great option that could give you a lower monthly payment than purchasing, it is best to discuss specifics with a qualified sales professional.
A Good Deal
The car business is one of the most misunderstood and oftentimes mistrusted industries in our country. As consumers it is our goal to purchase a vehicle for as little as possible and traditionally the goal of salespeople is to sell a vehicle for as much as possible. I stress the word traditionally because nowadays new car manufacturers put an emphasis on volume, so “new car dealerships” put much more emphasis on selling a car and earning a customer than they do on making a lot of money selling each car. We assume everyone will come back for service, their next car, etc.
At a new car dealership (Chevy, Honda, Toyota, etc.) a salesperson’s pay is based more on how many vehicles they sell each month rather than how much they make on a sale. As a salesperson, I feel the goals of my customers and my own are very much aligned: you want to buy a car, I want to sell a car. You want to feel good about your purchase and what you paid — ironically, that is exactly what I want too! When I present a purchase proposal, I often “joke” with my customers that part of what they are getting for their hard-earned money is me to take care of them after the sale. Those that buy from me know I was not kidding at all!
Thank you for taking the time to read my blog — I look forward to meeting you!
(The statements and opinions published herein are not necessarily those of Bob Brown Automotive, Chevrolet, General Motors, or its subsidiaries)
Luke Bowers can be found most days (except for Sunday) at Bob Brown Chevrolet in Urbandale, IA. Please feel to call (515) 291-2929 (cell) to set up an appointment or for a phone consultation, regardless of the make or models that you are considering.