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SHOULD I LEASE OR BUY A CAR? IF I BUY, SHOULD I BUY A USED CAR OR A NEW CAR? AND, IF I BUY, SHOULD I FINANCE IT OR PAY CASH?
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LeaseBuyBuy New - For CashBuy Used - For CashBuy New - FinanceBuy Used - Finance
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Length of Lease (e.g., 3 years)3Anticipated Time You'll Own the Car (e.g., 10 years)10101010
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Monthly Lease Payment $ 500 Monthly Principal and Interest Payments on Loan $ 450 $ 400
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Cost of Car $ 50,000 $ 40,000 $ 50,000 $ 40,000
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Value of the Car at the End of Term** $ 2,500 $ 2,000 $ 2,500 $ 2,000
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One-Time Costs at Start of LeaseOne-Time Costs at Purchase
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Trade In Value for Your Current Car $ 4,500 Trade In Value for Your Current Car $ 4,500 $ 4,500 $ 4,500 $ 4,500
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Cash Due at Signing $ 3,000 Cash Paid or Cash Down on Loan $ 45,500 $ 35,500 $ 3,000 $ 3,000
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Sales Tax* $ 2,000 Sales Tax $ 2,000 $ 1,500 $ 2,000 $ 1,500
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Title Fee $ 100 Title Fee $ 100 $ 100 $ 100 $ 100
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Registration Fee $ 100 Registration Fee $ 100 $ 100 $ 100 $ 100
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Acquisition and Documentation Fees $ 100 Documentation Fees $ 100 $ 100 $ 100 $ 100
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MINUS Dealer Cash Incentives and Tax Credits $ 300 Loan Acquisition Fees $ 300 $ 300
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[OTHER]Warranty Costs $ 1,000 $ 1,000 $ 1,000 $ 1,000
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[OTHER]MINUS Dealer Cash Incentives and Tax Credits $ 300 $ 300 $ 300 $ 300
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TOTAL ONE-TIME COSTS AT START $ 9,500 TOTAL ONE-TIME COSTS AT START $ 53,000 $ 42,500 $ 10,800 $ 10,300
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One-Time Costs at End of LeaseOne-Time Costs at End of Loan
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Extra Mileage Charges $ - Remaining Loan Balance*** $ - $ -
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Wear and Tear Expenses $ - Loan Prepayment Penalties $ - $ -
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Disposition Fee $ - [OTHER] $ - $ -
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TOTAL ONE-TIME COSTS AT END $ - TOTAL ONE-TIME COSTS AT END $ - $ - $ - $ -
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Annual CostsAnnual Costs
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Annual Registration and/or Inspection Fees $ 300 Annual Registration and/or Inspection Fees $ 300 $ 300 $ 300 $ 300
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Gas $ 2,400 Gas $ 2,400 $ 2,400 $ 2,400 $ 2,400
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Insurance (including any mandatory gap insurance) $ 1,000 Insurance $ 1,000 $ 900 $ 1,000 $ 900
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Maintenance**** $ 1,000 Maintenance**** $ 1,000 $ 1,200 $ 1,000 $ 1,200
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Parking $ 300 Parking $ 300 $ 300 $ 300 $ 300
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TOTAL ANNUAL COSTS $ 5,000 TOTAL ANNUAL COSTS $ 5,000 $ 5,100 $ 5,000 $ 5,100
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TOTAL CASH AND NON-CASH COSTS OF THE CAR PER YEAR $ 14,167 TOTAL CASH AND NON-CASH COSTS OF THE CAR PER YEAR $ 10,300 $ 9,350 $ 11,480 $ 10,930
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*In some states, cities, or municipalities, this sales tax is rolled into the monthly lease payment; in others, the sales tax must be paid up front.
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**To estimate this number, think about how long you expect to own the car and the number of miles you'll put on it each year. Then, look up the current fair market value of this make and model of car with a similar age and mileage. For example, if you're looking at a Toyota RAV4 and you expect to keep the car for 10 years and you drive about 10,000 miles per year, look up what a 10 year old RAV4 with 100,000 miles is selling for today. Then, maybe add a little bit extra to today's selling price to account for inflation when you sell the car 10 years from now.
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***Enter a number here if the term of your loan is longer than how long you plan to own the car. For example, if you have a 7 year loan and you sell the car afer 5 years, you'll likely have a loan balance to pay off.
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****Maintenance includes things like oil changes, new tires, car washes, detailing, repairs, etc. Note that maintenance on an electric vehicle may be less than maintenance for a gas powered vehicle.
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LEGAL, INVESTMENT AND TAX NOTICE: This information is not intended to be and should not be treated as legal advice, investment advice or tax advice. The reader should under no circumstances rely upon this information as a substitute for obtaining specific legal or tax advice from their own legal or tax advisors.
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