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Rule of Thumb For Deciding Between Buying and Leasing a Vehicle

  • by CWA
  • •    February 28, 2020
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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. 

LISTEN TO THE EPISODE
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.

CONTACT CWA

Cain Watters is a Registered Investment Advisor. Cain Watters only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Request Form ADV Part 2A for a complete description of Cain Watters investment advisory services. Diversification does not ensure a profit and may not protect against loss in declining markets. Past performance is not an indicator of future results.

Cain Watters is a Registered Investment Advisor.  Cain Watters only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.  Request Form ADV Part 2A for a complete description of Cain Watters investment advisory services. Diversification does not ensure a profit and may not protect against loss in declining markets.  Past performance is not an indicator of future results. 

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