File Segregation is not a Viable Solution

Lease Versus Purchase

One of the keys to staying away from high levels of debt is learning to spend your money wisely. The wise use of money is a rather broad topic that can often be quite subjective. What I consider wise may differ quite drastically from the view of another. In situations where there is not a clear cut financial principle to apply it pays to closely examine the alternatives to ensure the solution that best fits your particular needs and circumstances. A very common example of a financial "grey area" would be determining the best way to finance a new vehicle. Let. s examine some of the advantages and disadvantages associated with these choices.

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Purchasing a vehicle allows an individual access to unlimited mileage. This may be extremely important to those who travel for work, have long commutes, or drive long distances on vacation. The savings associated from the avoidance of "over-mileage fees" can be significant. Another advantage is the absence of a mandatory trade in period. There is never a point in time that you must turn the vehicle in. This fact eliminates problems such as early trade in fees and costs associated with excess wear. Another advantage is that (if the vehicle is not sold) at some point in time it will belong to the individual outright. At this point the need for any type of monthly payment would be eliminated. Perhaps the biggest advantage with purchasing through a loan versus leasing is that overall long term costs are lower.

Leasing offers the advantage of lower monthly payments without a large down payment. This allows an individual to drive a vehicle that may otherwise not be affordable. This option may also be appropriate for an individual who prefers to acquire a new car every couple of years. For many this would not be possible if they were purchasing a vehicle with a loan. Another advantage is that major repairs are covered under the terms of the lease. Getting these problems resolved should be a simple matter of dropping the vehicle at the dealership.

The decision to lease or purchase a vehicle should be made in light of an individual. s circumstances. The biggest advantage associated through the purchase of an automobile is that over the long run the overall costs are less. This option would certainly allow a person to place additional amounts of money into savings or other areas. The biggest advantage of a lease program is the immediate affordability. If an individual is determined to buy a specific vehicle regardless of cost than it may be better to lease in order to prevent higher monthly payments from interfering with other financial commitments.

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.