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Tuesday, March 12, 2013 |

A New Car

One financially negative aspect of our move to California is that we are going to have to become a two-car family. Living in Chicago, as we do now, we have more than gotten by with one vehicle. In fact, until our little guy came along, we would have been perfectly fine without a car at all. Such is the joy of urban living.

California, on the other hand, is a driving state. Unless you live in downtown San Francisco, I suppose. Since we’re going to be living in Sonoma Valley, having a car is absolutely essential. So, for the first time ever, we’re going to either have to buy or lease a car.

Being total newbies to this process, I’m trying to decide which option will be best for us. In my mind, we have three options:

1)      Buy a new car and incur a car loan (and payments) to do so.

2)      Buy a used car and pay for it all upfront.

3)      Lease a car and incur monthly payments, but avoid a car loan, which would be considered a liability on a credit report.

The rent vs. buy debate is similar, in some ways, to that of buying a home vs. renting an apartment. One the one hand, renting helps you stay loan-free. On the other hand, renting is like “throwing away” money, because you don’t have any equity in that asset.

However, I think there’s a key difference when it comes to cars. Cars only depreciate in value. You’ll never sell a car for more than you bought it… or even break-even. They lose money the minute you drive them off the lot. So, is it really worth it to own one? Still, owning a car may be the cheaper option, when you price it out over the long-term.

Do you own or lease your car? What has been your experience?


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