Please pardon our appearance as we complete the final development phase

Introduction

Formulate a Financial Plan

Know Your Net Worth

Manage & Minimize Debt

Accumulate Assets

Budget to Live Within Your Means

Understand Investing Basics

Plan for Retirement

Insure People & Property

Deal with Financial Advisors

Review Your Employment Contract

Make Plans for Your Estate

Make Good Decisions

Conclusion

If you live in an urban area with good public transportation, you may not need a car. This could save you thousands of dollars a year on car payments, gas, parking, repairs, and insurance. Most of us, however, are highly dependent on our cars, and many households need more than one.

As a driver, you have two choices: buy or lease. Unless you’re buying with cash (unlikely for most young doctors), you’re going to have to make periodic monthly payments under a financing agreement.

The decision to buy vs. lease must make sense within your budget. Leasing is usually cheaper over the short term but more expensive if utilized over a longer period. Be sure to account for all anticipated costs under either scenario. Budget for gas, maintenance, registration, insurance, parking, etc. Gas mileage may be an important consideration in keeping costs low. Also take into account the impact of selecting a used rather than a new vehicle.

For a given vehicle, monthly leasing costs are lower than purchase payments, but there are many other considerations. Links below lead to additional information and a calculator you can use to quantify and compare the costs.

 

Lease 

If you commit to leasing, you can get a new car every few years. Advantages include having a vehicle that is always under warranty, which means fewer maintenance costs, and access to the latest technological innovations and gadgets. 

Disadvantages are that you don't own the vehicle, and you may have to pay for excess mileage or wear and tear at the end of the lease. You may also have to pay for Gap insurance during the lease term, which covers you for the amount you owe on the lease in the event the car is stolen or declared a total loss due to accident.

 

Purchase

Advantages to purchasing a car are that once it's paid off you own it and no longer have to make monthly payments. You are also free to do whatever you want with the car, whereas under a lease you must maintain it in pristine condition.

You can drive your car as much as you want without having to worry about crossing any mileage limits.
When you decide to get a new car you can trade-in your existing car, thereby reducing the amount you need to pay for the new one.
   
Early in your career, avoid making a car into a conspicuous consumption statement. If you must make such a statement, defer it to a much later date, when your household finances are solid.

If you’re buying a car, keep the following in mind:

  • Do your research ahead of time to identify the fair value of your preferred vehicle. Sites such as edmunds.com, kbb.com, or carsdirect.com may be useful
  • The U.S. Environmental Protection Agency provides information on Fuel economy and EPA ratings
  • Compare dealer financing offers to regular bank loans. The latter may offer better terms
  • There’s lots of advice available on the web, including when and how to get the best deals, how to negotiate most effectively with dealers, etc.

Consumer Reports and U.S. News & World Report are some of the online sources available to address the purchase vs. lease question.

 

Related Links:

Bankrate’s Buy vs. Lease Car Calculator (Bankrate.com)

2017 Consumer Reports Article on Buying vs. Leasing a Car (ConsumerReports.org)

US News on Buying vs. Leasing a Car

Fuel economy and EPA ratings


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