When shopping for a new Acura, the question often arises, “Should I buy or lease?” Consider factors such as monthly budget allowance, vehicle usage, and upfront and turn-in costs before you decide. Let’s break it down.
Monthly Payments
When you lease a vehicle, it is a lower monthly payment. Essentially, you are paying for the wear and tear of the vehicle, plus interest, while driving it over the term of the lease. If a 2019 Acura MDX costs $40,000 and the depreciated value when finished is $30,000, you end up paying $10,000. This is called the Residual Value. For three years, this example translates to $278 per month.
When you finance a 2019 Acura MDX, you pay the entire $40,000. You will most likely need to put a deposit down, or trade in a vehicle, and finance the rest. Let’s say you trade in your old vehicle for $10,000 and finance the balance. A five-year note will cost you around $500 per month at a zero interest rate. At a 4.9 percent interest rate, that number jumps to $565 per month, twice the amount of a lease payment.
Ownership
When you lease, you never own that sporty Acura NSX. It is like paying rent on an apartment. When your term is up, you turn the vehicle in and you get nothing in return. Often there are fees associated with leases that can add even more money, such as excess mileage and unusual wear and tear. At this point, you either lease another vehicle or purchase one, because you need a car after all, right?
If you finance the sleek Acura NSX, when paid, you own it outright. You can sell, keep, or trade it in for a new one — you decide. The bottom line is when you purchase a vehicle, you build equity, provided the value of the vehicle doesn’t overly depreciate. This is more likely to happen if you finance for long terms. In general, if you finance for longer than six years, you likely cannot afford the vehicle.
Taxes
When leasing or buying a new Acura, whether it’s the ILX, RDX, or NSX, you have to pay sales tax. The difference between leasing and buying is with a lease, you generally only pay sales tax on the down payment and monthly payment. However, this can vary widely depending on the tax jurisdiction you reside in. Sometimes you pay sales tax on the entire value, so be sure to check. If you put $3,000 down on an Acura TLX lease, and your payment is $250 per month for 36 months, your entire tax burden at 5 percent is roughly $600.
When you purchase that new Acura TLX, you are responsible for paying the sales tax on the entire value. If the car costs $30,000 and the tax rate is 5 percent, you must pay $1,500. That’s more than twice what you pay for a lease.
It is best to figure out how much you plan on driving the car, what you can afford every month, and then shop for the deal that best fits your lifestyle and budget. Visit Fox Acura of El Paso and find out more from our Finance department.
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