Which Car Should I Buy - or Lease?

What is the best car for you?
Car buyers are often overwhelmed by the large variety of available vehicles when attempting to determine which to buy or lease. Different brands, different models and sub-models, different options, different styles, different colors, and different prices. How do decide which car is best for you? How do you choose?

Your first step is to narrow down your choices to a manageable list of vehicles. Talk with friends and relatives. Ask them what they like and dislike about their cars.

Examine your lifestyle, and consider the type of vehicle that will fit that lifestyle. Look at your needs for a vehicle, both for now and the immediate future.

Go to several dealers and test drive a variety of vehicles – but leave your checkbook at home and don't sign anything. Make a note of the things you like and dislike about the vehicles you test drive. Is the vehicle comfortable? Easy to drive? Have good performance? Do you like the interior? Does it have features and equipment that you like? Decide on the features and equipment that will be important to you.

Use a loan calculator or lease calculator to help you determine an affordable price range. You should know the general price range for vehicles that you will be able to afford. Price will make a huge difference in your final vehicle choice.

Following are factors that may affect your selection process. Some factors will be more important to you than others.

• Cost and monthly payments
• Styling, color, and appearance
• Vehicle type - coupe, sedan, convertible, performance sports, hatchback, pickup, SUV, crossover, minivan
• Vehicle category - luxury, economy, family, sports, or truck
• Performance and speed
• Handling and driving characteristics
• Maximum number of passengers
• Storage and luggage capacity
• Fuel efficiency and cost of operation
• Cost of insurance
• Safety features, such as side air bags and traction control
• Optional equipment, such as GPS navigation and premium sound system
• Cost of maintenance and repairs
• Resale value
• Reliability and dependability
• Warranty

Decide what's important
Some people like a systematic approach and others prefer a less structured method of deciding the most important factors from the list above.

If you like the structured method, make a list of factors above and give each factor an importance rating of 1 to 10. Then reorder the list, placing the most important factors at the top and the least important at the bottom. This now gives you a reference when considering particular vehicles.

For example, a teenager buying her first car may place low cost, reliability, low insurance cost, and low fuel cost as the factors at the top of her list. Styling and power may not be so important. She'll probably soon discover that a Honda Civic or Toyota Camry will be best at meeting her requirements. Her older brother with the big bank account may have high performance and styling at the top of his list. A Chevrolet Corvette might be a good choice for him.

Doing your research

Many first-time car buyers rely more on gut-feel and emotional instincts than on hard facts and data. Some depend on a dealer salesperson's advice. This can be a big mistake. Buying the wrong vehicle can cause a great deal of pain and also be very difficult to rectify. It's important to make your own decisions and get it right the first time.

Use the Internet for obtaining most of your research information. Nearly all is free. There are thousands of online information sources about automobiles. Edmunds.com is one of the best starting places. Here you'll find all makes and models, specifications, sticker prices, dealer invoice prices, professional reviews, user ratings, and free price quotes.

Car owners and enthusiasts have group discussion web sites (forums) on practically every brand and model vehicle. Find out what real owners are saying about those vehicles. Join the group and ask questions. It's free — and fun. To find these forums, simply search on "Nissan Altima forum," as an example if your interest is in the Nissan Altima. Or "Porsche 911 forum," or "Corvette forum." Members will even tell you what they paid and the kind of deals they got. Edmunds.com also has car owner forums and expert advice.

Consumer Reports magazine is the most respected source of research information for prospective car buyers. The annual car issue in April is a bible to thousands of consumers each year. They review new vehicles each year and make recommendations on both new and used vehicles. All vehicle makes and models are ranked by owner-reported reliability data and safety performance testing. The same information is available on the Consumer Reports web site (for a small fee).

It is also important to research insurance cost for the vehicles you may be interested in. Insurance premiums can vary considerably between seemingly similar vehicles. Vehicles that are stolen often or are expensive to repair will demand higher rates. If insurance cost is important to you, call your insurance company and ask about rates on all the vehicles you are considering. If you don't yet have an insurance company, see Selecting an Insurance Company.

Test drive your choices
If you are buying or leasing a new car, ALWAYS test drive the vehicles you're considering. Test drives are free and do not obligate you in any way. You'll get a feel for how the car drives, how comfortable you feel in it, how it performs, and what features you like or dislike. Do not let dealer salespeople pressure you into making a fast decision if you still have other vehicles to test. In fact, leave your checkbook at home when you go to do your test drives.

If you are buying a used vehicle, ALWAYS test drive the ones that interest you. Also have the vehicles inspected by a qualified mechanic. Never take the word of the seller. Sellers often don't know about problems themselves but, even if they do, they may not tell you about them. Since used cars are sold "as-is", it's your responsibility to discover problems before you buy. Buying "certified" used cars from a dealer offers a degree of protection, at a slightly higher cost.

Always get a CARFAX Vehicle History Report on any used vehicle you are considering buying. Many used car dealers provide such reports on cars they sell. If you buy from an individual, get your own report or have the seller provide you with one.

Financing may affect your car choice
Financing a new car purchase is often not given the attention it requires. Many first-time buyers don't understand the process and leave everything up to the dealer and his finance manager. This is a mistake. Let's be clear - buying a new car is not like buying a refrigerator at Sears.

If your finances are tight, it will affect the kind of car you choose to buy or lease. Auto lenders don't want to lend you more than you can handle with your current income, your total debt, and your credit score. Therefore, it's always a good idea to get a pre-approval for the amount of money you think you'll need to borrow. You are not obligated to take the loan and you can use this as a technique to compare dealer loan rates. Use DriverLoans.com to get free pre-approved loan quotes.

If you think you want to lease, or don't know if you should, be sure to read our Lease Guide. You can lease any car you find at a dealer, even used cars. We recommend checking with Primelease.com and compare their deals to your dealer's deals.

You should also know your FICO credit score from MyFICO.com , which lets you know how a lender will see your credit worthiness and set your interest rate, or if you will be approved at all. If you deserve a low interest rate, make sure you get it. Dealer's often tell customers that they have a low credit score when they don't. If you know you have credit problems, you may to spend extra time shopping for good loan rates.

Additional comments about selecting a car

Following are some comments, based on our experience, that may be helpful to you:

• If low cost is a primary concern, leasing may be an answer, assuming you are qualified (see this article). Buying a relatively new used car is less expensive than buying new model because you avoid the rapid first-year depreciation. An older used car may be the best deal if you find one with average miles and no serious problems.
• If reliability and dependability is important, Japanese brands tend to be generally more reliable that American and European brands.
• If safety is a major factor, look for models that have advanced safety features such as electronic stability control and side air bags. Sometimes such features are standard. If not look for them as options. Compare crash test results for various makes and models.
• If gas economy is important, look at smaller cars such as the Toyota Yaris, Honda Fit, or gas-electric hybrid vehicles. Avoid large heavy vehicles such as SUVs and vehicles with large engines. Look for vehicles that do not require premium grade gasoline.
• If insurance cost is a concern, avoid sports vehicles, vehicles that are expensive to repair, and vehicles that are frequently stolen. Insurance is the single largest auxilliary cost of car ownership for most people.
• If price is one of your top factors, American car brands tend to have the largest price flexibility and the most generous rebate and financing incentives. However, some Japanese brands such as Honda and Toyota are excellent values for the money.

Get it right the first time
If you don't do your homework and decide on a vehicle that you discover is not right for you, it may be difficult to correct the mistake. First, there are no "grace period" laws for automobiles, which is commonly misunderstood. Once you sign your purchase or lease papers, the deal is done.

Second, you'll get a big shock if you try to sell or trade a vehicle soon after you buy it. A new vehicle can depreciate by as much as 20% almost immediately. You'll probably owe more on your loan than your car is worth. It's nearly always better to stick with the car until your loan balance catches up with the market value or trade value, which will usually happen late in the life of the loan. Therefore, make sure you make the right choice the first time.

For more, see LeaseGuide.com