When it comes to cars they are considered assets but the value of cars decreases as we use them over sometime so when you are thinking to get a car you can buy it or lease it.
As a college student leasing, a car will be economical but it may not be economical as it depends on the individual. Here are a few factors you should consider before leasing a car.
Budget:
leasing a car requires a down payment and monthly fee. So make sure you have a stable income to provide for that.
Usage of the car:
as a college student you need to commute from point A to point B and when you lease a car the distance you can cover will be limited so if you are travelling a lot then leasing might not be your option.
Maintenance:
When it comes to a used car or your car they need attention and maintenance as a college student you need to check whether you could afford it or not.
Good credit score:
you need to have a good credit score or someone who has it should sign for you when you get a car.
Money factor:
The money factor is the rate of interest on the lease; however it is expressed in a decimal format. Dealers can use your credit score to work out your rate. The higher your credit, the lower the money factor rate ought to be.
Return fee:
after the lease when you return the car you need to pay a return fee which covers the cleaning and repairing of the car before they put it for sale.
Acquisition fee:
this fee is charged to cover expenses of the dealer such as paperwork.
ADVANTAGES:
- It is the best option if you have a good income source
- You can drive different cars
- No need to pay for repairs and maintenance
- Affordable
DISADVANTAGES:
- Not a good option if you travel more
- You can’t lease a car if you don’t have an income source
- At the end of the lease, you won’t have an asset
- If you don’t have a good credit score or anyone to sign you they won’t lease your car.
- Wear and tear charges, if you return a car with dents or any other damages dealer might charge extra money.
EXAMPLE:
Here is a rough estimation of the lease cost
If the car value is $12,000 and the down payment is $4,000 with an estimated sales tax of 5% and interest rates at 10.6% the car would cost you $98 per month and the total lease cost would be $7423.
This is an estimated cost it may differ for different models of the cars and dealerships.
If you need a car can drive from campus to home and run some errands you can lease the car according to your budget. But if you travel more often, then consider other options. Leasing always depends upon you and your needs act accordingly and choose what’s best for you and your financial situation.
