Buying vs Leasing a Car

Deciding between purchasing or leasing a car is usually a difficult choice to make. On one hand, it may be intimidating to part with a large sum of money upfront if you choose to buy the car off the lot. However, financing is usually an option that helps lessen the financial burden. Additionally, you do end up owning the vehicle as soon as you drive it home.

On the other hand, you also have the option to lease. Once you’ve signed all the necessary documents, you get to drive the vehicle home – a vehicle that may have been too expensive for you to buy outright. You will also end up in a cycle of monthly payments to keep a new car, and will not be the permanent owner – unless you choose to buy the car at the end of the lease term.

Benefits of Buying a Car

The greatest advantage that you get when purchasing a car is that you actually own it from the day you bring it home. This means that, unless you go for an auto loan – you don’t have to worry about monthly payments and can choose to sell it at any time.

Even with an auto loan, when you’ve finished paying it off – you have complete equity in the vehicle. Although initial monthly payments may be higher than leasing, from a long-term financial perspective – buying is typically a smarter choice.

Buying a new car also usually means lower insurance premiums compared to when you lease. Additionally, a newly bought car means that you can rack up as much mileage as you want with no overage fees. You can even customize the car as you see fit. Overall, buying a car usually ends up being a cheaper option in the long run.

The Low Down on Leasing a Car

Although the idea of leasing a car may sound appealing, it actually comes with a few things to be conscious of compared to purchasing a vehicle.

  • By the end of the lease, you may have actually spent more than you would have by outright paying for the car or financing it.
  • Longer car loan terms at the end of your lease (if you choose to finance your vehicle once the lease is up) – may seem attractive, but you will actually end up paying more based on the interest alone.
  • People who choose to lease one car after the other will have monthly payments that go on for a long time. In the long term, the more cost-effective way to own a car is to buy and keep it until it’s no longer economical enough to maintain.
  • Most auto loan leasing contracts require you to stay within a set number of miles. Going over that limit means you need to pay an extra charge for the mileage penalty. The cost can be as low as 10 cents to as much as 50 cents for each extra mile.
  • If you decide that you don’t want the car anymore before the lease ends, you might be stuck paying thousands of dollars for early termination penalties and fees. These expenses will all be due at the same time.
  • Although monthly lease payments tend to be cheaper than auto loan payments, you will have no equity in the car at the end of the contract.

Buying a new car is typically more advantageous than leasing a vehicle in the long run. The overall amount you’ll spend when purchasing a car over time often ends up being significantly less in comparison to leasing — also keeping in mind the value of the car you get to keep when buying. Not to mention, more flexibility too.

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Car Prices Hit a Record High, What Does this Mean for You?

The average new car price hit a record high of $38,255 last month, according to JD Power. That’s up 12% from the same period a year ago.

If you’re out car shopping right now, be prepared to pay bigger bucks than usual for that vehicle. About two-thirds of car buyers paid within 5% of the sticker price last month, with some even paying above sticker price. That means there are fewer deals to be had and fewer negotiations taking place.

Why? Due to a computer chip shortage at auto plants around the world, car dealers are left with a fraction of the vehicles (both new and used) than what they typically have on hand. Since more people are buying used cars, they are also becoming as difficult to get as new cars.

Here are a few things to keep in mind if you’re in the market for a new or used vehicle right now:

  • Don’t expect a great deal: Don’t be surprised if the dealership only discounts the vehicle you’re looking at by a few hundred dollars, if anything at all.
  • Search outside of your community: Not finding what you want in your local area? Look at dealerships a bit further away from home. This can make a difference in getting the car you want or in hopefully getting a better deal.
  • Ask for top dollar for your trade-in: One bright spot is if you have a vehicle to trade-in, because of the shortage – trade-in values are at an all-time high. This can help cushion the higher sales price.
  • Hit pause: According to Edmunds, the vehicle shortages might last for another six months or so. If you’re not in a hurry to buy a car right now, their best advice is to wait a bit.

Are you still considering buying a new or used vehicle and need a loan? Click here to find out about a First Financial Auto Loan or get pre-approved to ensure you know where to start, what monthly payments you can afford and get the best deal possible for you.*

Waiting it out? You may be able to save by refinancing your current vehicle from another lender.** Click here to get started by filling out our online quick Auto Loan Review inquiry form.

Do you have a lease coming due soon? Another option is to keep the car you already know and love, by buying out your car lease.* Get started here.

*APR = Annual Percentage Rate. Not all applicants will qualify, subject to credit approval. Additional terms & conditions may apply. Actual rate may vary based on credit worthiness and term. A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See credit union for details. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan.

**Not all applicants will qualify, subject to credit approval. First Financial FCU maintains the right to not extend credit, after you respond, if we determine you do not meet our guidelines for creditworthiness. Current loans financed with First Financial FCU are not eligible for review or refinance. A First Financial membership is required to obtain an auto loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a Base Savings Account is required to establish membership.

5 Ways to Get a New Car for Less

Premium styling. Flawless paint. Glistening tires. That unmistakable new car smell. Everything about a new vehicle practically begs you to buy it. When you close your eyes and think about driving your brand new set of wheels off the lot, it quickens your pulse a little, doesn’t it? Shopping for your next vehicle is a uniquely exciting experience. Usually until you look at the price tag, that is.

If you haven’t priced cars recently, you may be surprised by the figures you find. According to a recent report by Edmunds, the average loan amount for a new car jumped to more than $32,000, and the average monthly payment rose to $558. Sure, the latest models may be nice, but facts are facts—that’s a lot of money to pay for a car.

Now, before we go any further, if you’ve been saving up for your dream car and figured out how to buy it without demolishing your budget, then by all means – go for it! But if you find yourself in the market for a new vehicle and you want to avoid overspending, we’ve got five tips to help you hang onto more of your hard earned money.

5 Ways to Save Money When Buying a Car

Do your research.

The last thing you want to do is show up to a car lot with no idea what you’re looking for. Lack of preparation puts you at the mercy of the salesperson. And while they may be genuinely nice people, sales professionals make their living by getting you to buy a product at the highest price possible. So, before you head to a dealership, narrow down your choices by doing your research. Thanks to the Internet, companies like NADA, Car and Driver, and CarsDirect can help you sort thousands of options by everything from location to price to trim packages.

Get preapproved. ​​

Once you’ve determined which vehicle fits your preferences and meets your needs, it’s smart to get preapproved for financing. There’s a good chance you’ll find better financing rates through your local credit union than through another lender. Once you’re preapproved, you’ll know how much you can afford, what interest rate you’ll pay, and what your monthly payments will be. This information gives you the upper hand in price negotiations and keeps you from getting distracted by dealer tactics that focus strictly on monthly payments. Preapproval lets you negotiate based on the most important aspect—price.

Shop for incentives.

When sales are lower than expected, automakers will often extend money saving incentives to encourage buyers to purchase their vehicles. This is an instance where the manufacturer’s loss can be your gain. If you’re not already loyal to a particular make or model, you may be able to take advantage of dealer incentives such as discounts, rebates, and lower APR on financing. If you are loyal to a specific type of car, that can work in your favor as well, as some car companies will offer customer loyalty incentives to encourage you to keep driving their cars.

Ask for a lower rate. 

There are plenty of books, websites, and podcasts that offer tips and tricks on negotiating more effectively. While most of their ideas have merit, there’s one suggestion that may seem a little too simple and straightforward—ask for a better deal. In most cases, a dealer or salesperson will start negotiations with an offer that benefits them the most. Asking them to do better is part of the game. To give yourself the best chance of success, be polite and be prepared to walk away. Some dealers will play hardball, but when they have an interested buyer (especially one with preapproved financing), most would rather sell a car for a little less than let it sit on the lot and hope another buyer comes along.

Choose a used car instead.

Maybe this tip isn’t exactly a way to “get a new car for less,” but it is an excellent way to save money on your next vehicle purchase. Since most new cars depreciate an average of 20% in the first year and nearly 50% after five years, buying a preowned vehicle is a smart way to steer clear of that depreciation. It’s also worth mentioning that in addition to their lower upfront prices, used cars usually cost less to insure. Save now. Save later. That’s a pretty convincing sales pitch, isn’t it?

When you’re ready to start shopping for your next car, we’re confident that you can handle the research portion. But when it comes to the financing and preapproval, do yourself a favor and contact us here at First Financial. We may be able to offer you a lower rate and more flexible terms than a traditional bank or lender.* Give us a call today. You’ve got nothing to lose — except months of unnecessary interest payments!

*APR = Annual Percentage Rate. Not all applicants will qualify, subject to credit approval. Additional terms & conditions may apply. Actual rate may vary based on credit worthiness and term. A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See credit union for details. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. 


Common Auto Loan Financing Misconceptions

AutoLoans“Don’t believe everything you hear.” How many times have you heard this when you were a kid? Well, everyone grows up and it’s time to actually listen to that little old saying, especially when it comes to buying a vehicle. There are tons of common myths and misconceptions out there, but what is the truth behind these myths? Find out the true answers to some of the most common car buying myths right here:

Myth #1  Auto dealers will always have the best loan rate & payment.

This isn’t always necessarily true. Credit unions and other financial institutions also offer competitive rates compared to dealerships. Those who are looking into buying a car should shop around and not only compare rates, but also compare restrictions, to find the best deal that fits their wants and needs.

Myth #2 Seeking multiple pre-approvals/loan offers will destroy your credit rating.

An individual’s credit score will not be affected negatively if seeking multiple offers. The analysis will have to be made within a certain time period of 14 days. However, keep in mind while shopping around this may cause multiple creditors to request a consumer’s credit report.

Myth #3  Auto loan refinancing is expensive.

It’s actually the opposite. Refinancing can drastically reduce your monthly payments and is an option you should consider. Have you stopped into your local First Financial branch location to see how much we may be able to save you each month by refinancing your car loan? Or give us a call at 732.312.1500, Option 4.

Myth #4 Refinancing isn’t an option on an auto loan.

Most people know that refinancing an auto loan can provide the same benefits as refinancing a home loan. They both can save you a lot of money by lowering the monthly payment or interest rate. Many may not know that refinancing an auto loan is actually much easier than refinancing a home loan. You might want to consider refinancing if your current car loan interest rate is above 6 percent, doing so could save you hundreds of dollars each year if you are approved!

Myth #5 Consumers think that even though Credit Unions have better rates – that you have to have perfect credit to get them, or be part of a union or work at a certain company to get them.

You do have to be a member of a Credit Union to get the Credit Union’s rates, and the rate you qualify for is based on your credit worthiness. However, most people do not realize just how easy it is to join a Credit Union these days, and that Credit Unions will at least try to work with you and help you get on the right track to a better financial standing if you aren’t currently. The majority of Credit Unions how have community charters – where you simply need to live, work, worship, or attend school in a certain area in order to become a member of that particular Credit Union. That’s certainly the case at First Financial – to join $5 in a Base Savings Account is needed at all times, and you must live, work, worship, volunteer, or attend school in Monmouth or Ocean Counties in New Jersey. Plus, once you are a member – your immediate family can join too.

As always, First Financial offers great low rates – and they’re the same whether you plan to purchase a new or used vehicle!