Leasing vs Buying a New Car in the USA – What to Choose?

Leasing means renting a new car for 3 years. The minimum lease term is one year, but usually 3. There is also a secondary lease, when the car is rented out after it has been used by someone for 3 years. Before that, it is repaired, cleaned, but it is still not new anymore.

Leasing is widespread because there is a high demand for used cars in the USA. It is profitable for the car owner to collect more money in the first three years, and the drivers take care of his cars, because they have to be returned, and then he easily sells them on the secondary auto market.

If you are in the United States on a work visa for a long time and you don’t want to buy a car, leasing is your option. In terms of money, it is almost the same as buying a used car, but not the whole amount at once, but by months. On the other hand, you will not be able to interrupt the lease at any time.

There are three types of leasing:

1. Zero down is a type of leasing, in which, when signing an agreement, you must pay the cost of the first month of leasing, dealer’s fee, acquisition fee, as well as services for registration and issue of a license plate (it is also possible to reissue a previous car for a new one) is about $ 1,100-1,500, depending on the size of the monthly payment.
2. Downpayment is a type of leasing, in which it is necessary to make an initial payment – downpayment. Here it is necessary to take into account the fact that with the indicated amount of the fee, you will have to pay additionally all the same aforementioned $1,100-$1,500 for paperwork, the so-called inception fees.
3. Sign & drive is the most profitable type of leasing available only to those who have a perfect credit history and have already paid several car loans. In this case, you can simply take your favorite car at a car dealership without any initial payments. Inception fees will be distributed over the months of the lease agreement.

There are also pitfalls in this type of financial lease, such as car leasing: for example, having leasing obligations, your car is subject to restrictions on its mileage for the contract term. And your own tricks – for example, by leasing one of the liquid car brands, such as Toyota Camry, Honda Accord or Lexus GX460, which confidently keep prices in the secondary market, you can get the most favorable financial terms, as well as minimal losses in case of early cancel from the lease agreement.

Purchase of a car

If you are in the states for a long time, want to drive around the country, live with convenience and comfort, think about buying a car. Generally speaking, you may have one problem: there is no credit history. As for the price of the car, the car can actually be found for $ 2,000, although you have to be carefully inspect and repair the car.

Pros:

• The car is yours.
• Then you can sell, if there is a necessaity.

Cons:

• Without a credit history, there will be no car loan, and insurance is high (for example, $ 250 a month).
• To buy on credit with adequate interest, you need a credit rating above 750.

What do you need to buy a new car?

You will need money. If there is a loan, then the documents to be given to you: tax number, salary documents, identity card, license, something where your address is documented, for example, receipts for a communal apartment. Sometimes you need recommendations from friends if your credit rating is low.

Nuances

If you buy a used car hand-held, you only need cash, which you exchange for a title certificate. It will contain your name, date of sale and amount.

If you buy a used car in the showroom, check it using the Carfax system and on government websites. It stores information about the previous owners of the car, accidents and everything important.
If you buy a new car, you can apply for a loan directly in the showroom. In some states, such as California, you simply drive out of the car, but in many others, you need to get your own insurance and license plates first. In this case, the salon will give you temporary numbers, and then you need to quickly change them to real ones.

License plates are linked to the owner, not the car. They will be taken from a used car, but you cannot drive without numbers and insurance. When you buy a car, you go for insurance, and then, with the ownership and insurance documents, go to the Department of Motor Vehicles, where you pay tax and get a new license plate.

Insurance can cost differently depending on the insurer. Browse the websites of different companies, fill out their verification forms and compare the prices they will offer you.

Some salons sell cars on credit to immigrants without a credit rating. It is more expensive, and you need to add recommendations from several people who know you to the package of documents (tax number, license, documents indicating your address and income).

Please note that while you pay the car premium, your credit history changes. If you are not late with payments, after six months or a little more it will be possible to reduce the interest on the loan, taking into account the updated credit rating.