Answer these questions before heading to the dealership
For a business owner, a vehicle is one of those purchases that can fit in both the personal and business categories. Depending on the type of person you are and your situation, a trip to the dealership could be exciting or stressful.
Before setting off on a test drive, it’s important to have intentions set so you get exactly what you want and need. This is a simpler task when you already have a budget laid out and know how a new car fits into your overall plan.
Still need to develop a budget? Hosts Hunter and Judson provide actionable guidance on the Accumulating Wealth podcast.
THE RULE OF THUMB
In the Accumulating Wealth podcast season 3 episode on debt, CPA’s Judson Crawford and Hunter Satterfield agree on one thing: If you plan to drive a car for longer than four years, it’s a better idea to buy than lease.
“Generally speaking, if you’re going to drive a car for more than four years, it makes more sense to purchase it,” CPA Hunter Satterfield said. “Looking at purely budgeting and what makes the most sense, I use that four year rule.”
There is the kind of person that enjoys having the latest and greatest car, and a lease allows for upgrading to a different vehicle every three to four years.
They do come with mileage restrictions, which is another factor to consider before signing a lease agreement. Exceeding mileage . It’s important to understand how many miles you travel on average per year so you don’t overpay in the end.
If you’re unsure of the mileage allowance you need, consider purchasing the vehicle.
“If you plan to drive it more than four years, you could easily pay it off in that time and then you have equity in something,” says Judson.
Having a budget in hand, an idea of how many miles you drive a year and clear intentions on how long you want the car to last, you can make a decision between buying or leasing that fits your needs.
Big purchases don’t need to be stressful. We are here to help.
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