(3 minute read)
If it’s time for a new car and you are also retiring or thinking about retirement you have a choice to make. You’ve probably wondered if it makes more sense to lease or buy your next set of wheels–especially if your income isn’t going to be quite what it used to be. Here are some benefits that leasing and buying provide.
The Pros of Leasing a Car
For many people driving around in a new car is what life is all about. However, it’s not always possible when living on a fixed income. Leasing a car, in many cases, is much cheaper than buying a car outright. For example, in 2017 a three year lease for a Honda CX-5 cost $287 compared the $416 you would spend paying a six year loan. If you already have your eye on a certain make and model, you can use this handy tool to compare how much you would pay to lease a car vs. how much it would cost to buy it. There is also the benefit of having to pay a smaller down payment when you lease, which can lower the up-front cost significantly. As far as cost goes the last thing to think about is the fact that when you lease a car it will be under a manufacturer’s warranty for the duration of your contract. This will save you a lot of money and hassle if the car ever breaks down as you won’t have to worry about costly repair bills that can hijack your monthly budget.
Buying or leasing a new car goes beyond cost. You have to consider safety as well. As drivers get older their risk of being injured or killed in a car accident goes up significantly. This is why it’s important for older drivers to have newer cars. Features such as rear view cameras, more airbags, and lane assistance technologies, help prevent you from being injured or killed in a car wreck. While it may be more financially prudent to buy an older more inexpensive car, leasing a newer car might end up costing you less in medical bills down the road.
The Pros of Buying a Car
There are still many benefits of buying a car. Though it might cost more in the end, you own the car outright. That means if the monthly payments get to be too much you can sell it (though at a depreciated value). This also means that you can trade it in for cash or credit towards you’re next car. On top of that, once you pay off your car, there is a very good chance that your monthly auto insurance premiums will decrease. While leasing may save you money now, if you’re looking for long-term savings, buying your car could save you money.
Another positive effect of buying a car is that most leasing companies restrict the number of miles you are allowed to drive and charge you extra if you go over that mileage. When you buy a car, you are free to drive it as far as the engine will take you. You can also customize the car as much as you want. So, if you want to upgrade the stereo or tint the windows, you are free to do so. This has the added bonus of offsetting some of the depreciation that comes with owning your car by increasing the value the more you upgrade it. Something as simple as putting new tires on your car or adding in a transparent GPS device can be worth it when you are ready to sell.
As you can see there are pretty good arguments for buying and leasing a car. It might be a good idea to talk to a financial advisor to see which fits your specific financial goals as you head into retirement. While you’re at it, you may want to talk to them about a life settlement. Either way you’re going to need to make a down payment, which can be expensive. If you have a life insurance policy that you no longer need a life settlement could be just what you need for a quick cash infusion. Did you know you can sell all or part of a life insurance policy, even term insurance? This has the added benefit of getting rid of a monthly premium payment so that you can afford the car you want and drive in style. If you want to hear more about it, feel free to contact us today.
David sold his business and retired recently due to a chronic illness. David’s financial advisor suggested he explore selling his corporate owned term life insurance policy that he no longer needed. David sold his one million dollar convertible term policy for $100K.
Life Settlement Advisors